While financial authorities decided to expand this year’s household loan total growth rate management target from the previous 1.5% to 3% under the the 13th real estate measures, data shows that the increase in household loans from January to July of this year has already reached 93% of last year’s full-year increase amount.
Lee Eoung-won, Chairman of the Financial Services Commission, urged, “Please ensure that funds for genuine demand purposes such as moving expenses, interim payments, and final balance loans are supplied in a timely manner without any disruption.” However, he emphasized, “We must be careful not to allow this adjustment of the total loan target to be perceived as a relaxation of lending control in the market, which could stimulate speculative demand.”
According to the Financial Services Commission on the 14th, household loans across all financial institutions increased by 6.2 trillion won last month. The increase narrowed for two consecutive months, from 9.3 trillion won in May to 8.3 trillion won in June and then to 6.2 trillion won in July. Bank household loans rose by 5.4 trillion won, a smaller increase than the previous month’s 7.6 trillion won. Second-tier financial institutions saw an increase of 800 billion won, similar to the prior month.
On a cumulative basis, the upward trend remains steep. From January to July this year, household loans across all financial institutions increased by 35.3 trillion won, reaching about 93% of last year’s full-year increase of 38 trillion won. With the possibility that demand for home mortgage loans and loans for genuine borrowers will continue in the second half of the year, the authorities’ management burden remains significant.
Home mortgage loans increased by 3.5 trillion won, a smaller rise than the previous month’s 4.5 trillion won. Bank home mortgage loan increases fell from 4.3 trillion won to 3.4 trillion won, while second-tier institutions saw a drop from 300 billion won to 100 billion won. Other loans, including credit loans, also decreased from an increase of 3.8 trillion won to 2.7 trillion won.
However, looking closely at bank home mortgage loans, the increase in general home mortgages actually widened. General home mortgages funded by banks themselves rose from 1.8 trillion won in June to 2 trillion won in July. Group loans decreased from 1.5 trillion won to 900 billion won, and policy-based loans also saw a narrowed increase from 1.4 trillion won to 900 billion won. Although the overall growth rate of home mortgage loans has slowed, it does not mean that demand for general home mortgages has declined.
Household loan total cap expanded from 1.5% to 3%... Individual targets for each financial institution will be adjusted separately
On the morning of this day, Lee Eoung-won, Chairman of the Financial Services Commission, held a “Review Meeting on Expanded Household Debt” at the Bankers Association in Jung-gu, Seoul. He stated, “Despite seasonal factors such as increased fund demand during the vacation season in July, the slowdown in growth of home mortgage loans and other loans appears to be due to active self-regulatory measures implemented by the financial sector.” However, he added, “Expectations of price increases centered on the capital region continue to persist, along with risks such as rising housing transaction volumes and increased fund demand during the vacation season.”
Following the comprehensive financial measures for stabilizing the real estate market announced the previous day, financial authorities decided to expand this year’s household loan total growth rate management target from 1.5% to 3%. The purpose is to utilize the additional lending capacity to ensure smooth supply of funds needed during the housing supply process, such as moving expenses, interim payments, and final balance loans, as well as loans for genuine borrowers.
Lee (Chairman) said, “Since loan regulations directly affect borrowers’ fund-raising plans, it is very important for the financial sector to show careful consideration for borrowers placed under regulatory scrutiny on the ground.” He also urged, “Please do your best in staff training and IT system improvements to avoid any confusion in handling procedures at frontline counters of financial companies.”
The fact that the overall target has been raised to 3% does not mean that individual loan limits for each financial institution will automatically increase uniformly. The Financial Supervisory Service plans to re-determine targets after consulting with the financial sector, taking into account each financial company’s existing total loan targets and management performance. The Financial Services Commission urged the financial sector to be careful not to allow this adjustment to be perceived as a relaxation of lending control in the market.
The Financial Supervisory Service stated, “We plan to quickly consult with the financial sector to establish total loan targets for each financial company to ensure that loans for genuine borrowers are handled smoothly.”
in FINANCE
