The Financial Services Commission decided to reinforce regulations on land security loans as a follow-up measure to the Korea Land and Housing Corporation (LH) incident. The announcement of the’Household Debt Advancement Plan’ scheduled for this month was to be postponed until the middle of next month. The financial authorities are also leading the counter, calling banks to order jeonse loans and mortgage management as housing-related loans are increasing rapidly, and end users are expected to get more and more difficult loans.
On the 23rd, a high-ranking official from the Financial Services Commission said, “After examining the issues raised by the’LH incident,’ we will announce household debt measures in mid-April.” Related content will also be included,” he said. The reason why the Financial Services Commission, which had been impaling the announcement of household debt measures since the end of last year in March, suddenly postponed it is because it is necessary to prepare a reliable countermeasure against the’LH incident’.
While LH employees received large-scale loans from the North Siheung Nonghyup to buy land in the Gwangmyeong Siheung District, it was pointed out that loan regulations for loosely regulated land and buildings are needed. Currently, when commercial banks make loans for land or buildings as collateral, the mortgage loan ratio (LTV) and total debt repayment ratio (DTI) regulations applied when receiving a mortgage loan are not applied. Compared to LTV 40% applied to houses under 900 million won in overheated areas and areas subject to adjustment, it is relatively easy to obtain loans.
It also includes a plan to apply a total debt principal repayment ratio (DSR) for each individual and refrain from lending when the ratio exceeds a certain percentage. DSR is an index that calculates the burden of repayment of principal and interest for all loans of borrowers during loan review.
Tightening the limits of the financial authorities, raising bank interest rates… What about household loans
Housing loans surged by 8.5 trillion this year
Banks increase loan interest rates one after another
As the rise in household loans, such as cheonsei loans and home mortgage loans, did not stop, the financial authorities called commercial banks to check the situation and ordered to manage related loans so that they would not increase rapidly. In line with the movement of the authorities, commercial banks are expected to increase interest rates for housing-related loans and tighten loans, increasing the burden on end users. According to the banking notes on the 23rd, the Financial Supervisory Service individually called some commercial bank loan officers in the afternoon of the previous day to check the status of transfers from households and the main charge. This is the first time the FSS has called an individual bank to check household loans since it convened five major commercial banks in January and held a credit loan check meeting, which showed a sharp increase.
The Financial Supervisory Service has been submitting daily household loan status from commercial banks this year and is monitoring monthly meetings. An official from the Financial Supervisory Service said, “The credit loans have decreased a lot, but the out-of-house loans and the main charge side seem to be steadily going out,” he said. “If there is a sign of a lot of loans increasing while monitoring, I will try to see the banks.” An official from the banking sector said, “It was to check how the household loan management plan that was paid at the beginning of the year was going on.”
Under pressure from the financial authorities, major banks are stepping up to tighten household loans by raising interest rates on loans one after another.
From the 25th, Woori Bank decided to lower the preferential interest rate, which was applied to the’Woori Jeonse Loan’, for mortgage loans for the Housing Finance Corporation and Housing and Urban Guarantee Corporation, from 0.4% to 0.2%. The lower the preferential interest rate range, the higher the loan interest rate for borrowers to bear. From the 5th, Shinhan Bank also cut the preferential interest rate for all household loans and judam universities guaranteed by the Housing Finance Corporation and Housing and Urban Guarantee Corporation from the 5th. NH Nonghyup Bank also increased its interest rate by 0.3 percentage points from the 8th through the adjustment of the preferential interest rate.
The rise in credit loans has calmed this year under strong regulations, such as the reduction of the limit on loans for high-income and professional workers, but the number of loans from households and head offices is increasing rapidly.
According to the banking sector, as of the 19th, KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup, among the five major commercial banks, had a total loan balance of 109 trillion 900 billion won, an increase of 4,687.9 billion won (4.5%) from 105.2127 billion won at the end of last year. The balance of leased households is on the rise to 106,7176 billion won at the end of January, 108,766.7 billion won at the end of February, and 109.9 trillion won on the 19th of this month. The headquarter is also showing a clear increase this year, with an increase of about 850 trillion won. The balance of the five major banks in charge is 473 trillion 7849 billion won at the end of last year, 476 trillion 367.9 billion won at the end of January, 480 trillion 125.8 billion won at the end of February, and 482 trillion 283.8 billion won on the 19th of this month. The increase in the loan balance is due to the rise in jeonse and house prices due to the influence of the third lease law. The demand to obtain loans in advance when the financial authorities announced plans to manage household debt in the near future also affected the increase in loans. An official from the bank said, “We know that there are many cases where end users, who are concerned that loans will be difficult due to government regulations in the future, receive loans in advance.”
[김혜순 기자 / 김유신 기자]
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