Following Nonghyup Bank's abrupt suspension of mortgage loans, Woori Bank and SC First Bank also temporarily suspended new real estate mortgage loans. The Nonghyup Mutual Finance (Regional Nonghyup) decided to block new officetel collateral loans and apartment group loans starting next week. This is because it exceeded the guidelines for the total amount of loans presented by the financial authorities (loan growth limit of 6%). When a ‘loan crisis’ occurs due to government regulations, end-users are outraged, saying, “Why do banks block loans when they don’t have money?”
According to the financial industry on the 20th, Woori Bank decided to restrict new jeonse loans until the end of September. This is because all of the limit on Jeonse loan has been exhausted in the third quarter. A Woori Bank official explained, “On the 19th, an additional 200 billion won was allocated, but it was all used up within an hour, so the suspension was inevitable.”
SC First Bank has suspended the handling of Cofix-linked products based on the new balance among ‘First Home Loan’, a representative housing mortgage loan product. The ‘First Jeonse Guarantee Loan’, which is a jeonse loan, decided to reduce new demand by increasing the interest rate by reducing the preferential interest rate benefit for branch managers. Kookmin, Shinhan, and Hana Bank have not taken any action yet, but the industry is saying that a “balloon effect” may occur due to the suspension of loans by other banks. An official from a bank said, “The number of inquiries from consumers whose loans have been rejected at Nonghyup and Woori Bank is increasing rapidly.
2 Financial institutions are also raising the lending threshold to prevent rapid loan growth. Local Agricultural Cooperatives decided to restrict the handling of some housing mortgage loans, such as officetels, from the 23rd, and to suspend new approval for apartment group loans.
Analysts say that the chain of loan suspensions by financial companies is only a 'trailer' of high-strength loan regulations in the future. The Financial Services Commission plans to introduce additional household loan regulations from September, after Koh Seung-beom's inauguration. A high-ranking official from the financial authorities said, “We will cover various loan restraint measures to reduce household debt risk. said.
“The government’s regulation of the total amount of bank loans is a well-packed real estate measure as a measure against household debt.” (CEO Hong Chun-wook, EAR Research)
As the financial authorities are recently regulating the total amount of household loans, criticism is being raised that it will only increase the suffering of end users and that the expected effect of the policy will be difficult to achieve. This is because, unless house prices, which have already skyrocketed, or jeonse and monthly rental prices stabilize first, the loan demand itself is unlikely to decrease. Experts say that no matter how artificially the government raises the bank threshold, it is impossible to block all loan demand based on actual demand. advised
According to the financial authorities on the 20th, the rate of increase of household loan balances in the financial sector as of last month was 10.0% a year from the same month a year ago, up 0.3 percentage points from the previous month (9.7% a year). Financial Services Commission Chairman Eun Seong-soo emphasized that he would limit the increase in household loans to the 3-4% level in the second half of this year and set it to 5-6% annually, but this plan has been shattered from the first month.
Even though the “Restriction on the Total Debt to Principal Repayment Ratio (DSR) of 40%”, which is the core of the household debt management plan announced by the FSC in April, was implemented in July, it was not enough to stop the increase in loans. DSR is the ratio of loan principal and interest repayment divided by annual income. In other words, the principal and interest repayment amount of all loans held by individuals should be within 40% of their annual income. As the loan limit is determined according to this number, there are cases where you cannot get as much loan as you want.
However, while introducing these regulations, the government decided to recognize as exceptions to loans for cheonsei funds, loans secured by deposits, insurance contract loans, and group loans for moving expenses and interim payments in order to prevent damage to end-users.
The problem is that most of the increase in household loans last month continued in this exceptional sector. According to the Financial Services Commission, mortgage loans in the financial sector increased by 7.5 trillion won last month, a sharp increase from the previous month (6.4 trillion won). An official from the Financial Services Commission explained, “The amount of subsidy for new housing purchases has been steadily decreasing since last year, but the increase in household loans has not been caught due to the sharp increase in jeonse loans and group loans.”
It is evaluated that the high rise in house prices and jeonse and monthly rental prices is a key factor in the growth of loans. According to the Korea Real Estate Agency, the total housing sale price in Seoul rose 0.60% last month, a sharp increase from the previous month (0.49%). The rate of increase in jeonse prices also jumped to 0.49% from the previous month (0.36%). Even if there is no speculative loan demand, the total amount of loans will inevitably increase steeply in proportion to the rise in house prices. An official from the financial industry said, “In the past, 200 million won per person was enough for a loan for jeonsei funds, but now it needs to be at least 400 million to 500 million won to maintain the same position and the same equilibrium. “I need a loan, but what is the meaning of regulating the total amount?” he asked.
Experts are also skeptical of the government's current household debt policy. CEO Hong Chun-wook said, “It has been almost 10 years since the government started pointing out that the household debt problem is serious. was 44.7%, down 2.9 percentage points from the same period last year.”
Kang Young-hoon, CEO of Real Estate Study, also pointed out, “If we strengthen loan regulations, will end-users who need a place to live immediately give up on raising funds? did. “The government should stop thinking about controlling house prices through financial regulations that do not become the government, and stabilizing house prices as a supply measure to induce listings in the real estate market,” said CEO Kang.