Why did the Blue House scold the financial authorities… What is DSR? Park Jong-seo’s financial success

The Financial Services Commission will announce the’advanced plan for household debt management’ next month. It is said that the reason for advancing the word is because it is a system that allows you to borrow money only for your ability. The market interprets it as an intention to raise the loan threshold to get a price for the house.

DSR regulation announced for the purpose of’catching the house price’

There are two main measures to be taken. First, the total debt principal repayment ratio (DSR) is applied individually. DSR is a regulation that determines how much money is spent as principal and interest per year in annual income. For example, if a person who makes 100 million won a year is paying 40 million won in principal and interest on the entire loan that year, the DSR is 40%.

Currently, each bank is applying DSR 40%. Even if banks have applied a DSR of 70% to one borrower, they can lower the DSR of another borrower to 10%. According to the method announced by the Financial Services Commission, it means that no one will exceed 40% of the DSR in the future. Of course, we have not yet decided on the individual DSR rate.

Currently, the total debt service ratio (DTI) is applied. DTI is similar to DSR, but only the mortgage loan reflects the principal and interest, and the remaining loans are subject to the principal and interest payment. DSR calculates the principal of all loans, including credit loans.

Credit loans assume that the entire loan is paid off over 10 years. If you borrow 100 million won, even if you don’t actually pay the principal, it is considered to have been repaid by 10 million won per year. As the principal to be repaid per year increases, the loan limit in DSR regulation decreases compared to DTI.

DSR is taken on a per-bank basis, but is already applied to some individuals. It is the time to buy a house with a market price of more than 900 million won, and when a person with an annual income of 80 million won or more receives a credit loan of more than 100 million won.

(Every time I write an article, my head hurts. Reporter Dae-hoon Kim, a junior from the Ministry of Finance, wrote the DSR calculation method as an article. You can search for the article “Lenders tightened due to individual DSR regulation…high credit loans are also paid in installments”.)

In the end, it means to cut down on large credit loans.

The second key to countermeasures against household debt is the obligation to repay in installments on credit loans over a certain amount. Credit loans usually pay only interest until they expire. Most maturities are one year old, but when the maturity comes back, it is extended every year. It is common to pay them all at once when you no longer need to owe them.

When I introduced the DSR earlier, I said that for credit loans, the principal will be repaid over 10 years only by calculation, even if the principal is not paid. Now it’s really about paying back.

If so, two variables arise with respect to the payment of the principal installment of a credit loan. How long will you need to receive your credit loan in order to be obligated to pay in installments and how many years you will be forced to pay it.

If the credit loan maturity is one year and you borrow 60 million won with no interest, you have to pay 5 million won a month. If a person with an annual income of 100 million won borrows this money, the DSR becomes 60% (60 million won/1 billion won). Financial authorities will think this is nonsense. If you ask to repay over 3 years, you have to repay 20 million won per year, so the DSR is 20% (20 million won/1 billion won).

But what would happen if we regulated to make payment in installments only when borrowing in excess of 60 million won? DSR drops to 6% (6 million won/1 billion won). As it is now, 60 million won is calculated as paying off over 10 years. Perhaps some of you have noticed. The final goal of the measures to advance household debt is that the focus is to curb large credit loans.

The government seems to be trying to find a union that does not block the line of money it is trying to use for living expenses, but that can meet the credit loans it is trying to obtain for home purchases. What percentage of the individual DSR will be used and how much will be the basis for the obligation to repay the principal of credit loans is likely to be an important variable. The Financial Services Commission announced that it will provide’tweezers support’ in this area, because if a uniform standard is set, young people with low incomes may not be able to get a loan enough to buy a house at all.

An emergency to reduce the credit limit for high creditors

It is difficult for me to agree on a policy to curb credit lending to high-credit, high-income people who are capable of paying back money. Because it doesn’t match financial common sense. At first, I thought it would be okay to pretend to be properly regulated by the financial authorities, but I did not expect it.

It was because I thought that I had already left the hands of financial officials. In August of last year, President Moon Jae-in instructed the Financial Services Commission to “take measures to reduce the effectiveness of real estate measures through credit loans.” If the house price is rising and credit loans are increasing, the house price can rise further, so it means to come up with a solution.

The financial authorities have urged the bank to reduce credit loans for banknotes to 2 trillion won per month starting the month following President Moon’s order. Until then, the impression was that in order to overcome the Corona 19 crisis, it was better to loosen enough money in the market.

It was found that there was a’Blue House’s voice’ to reduce credit loans not only in August of last year, but also in recent years. Not long ago, I asked bank executives to somehow curb credit lending, and I think that’s why. Credit loans declined in December and surged again in January.

Given this situation, we anticipate that next month’s measures to advance household debt will be quite strong. If you have a need for financing, I think you need to prepare in advance. It will not be implemented immediately from March, but it will be inevitable that the credit threshold will gradually increase.

For reference, it is said that credit loans previously received are not applied retroactively. And the negative bankbook is a credit loan, but it is not eligible for payment in installment.

Reporter Park Jong-seo [email protected]