Household loan regulations tightened on all fronts… Shinhan Bank to halt ‘bridge loan’ for investing in property from the 26th

Financial authorities announce additional measures for household debt management
Considering expanding DSR to include housing loans
Major banks raise credit loan interest rates by 0.2%P, ‘As the trend of increasing loans shows no signs of slowing down, banks have taken strong measures by raising loan interest rates and halting handling of loans for rental deposits. Following the announcement by financial authorities to reduce the limit for mortgage loans starting next month, on the 21st, they expressed the policy to further tighten loans at this point, emphasizing the need to manage household debts with heightened caution. If the increase in household debts continues unabated, additional measures will be implemented.’,
,
, ‘On this day, the Financial Services Commission held a meeting to check household debts with related agencies such as the Ministry of Economy and Finance, the Ministry of Land, Infrastructure and Transport, the Bank of Korea, and the Financial Supervisory Service, as well as the Korea Federation of Banks, the Association of Second-Tier Financial Institutions, and the five major commercial banks. The government decided to implement additional measures step by step based on trends in household debt growth and the real estate market situation.’,
,
, ‘During the meeting, discussions were held on expanding the application scope of the Debt Service Ratio (DSR) to include rental deposits or policy mortgages and raising the risk weights for bank mortgage loans. If the application scope of DSR is expanded, it is expected to lead to a reduction in loan limits. If the risk weights for bank mortgage loans are increased, banks may need to reduce their total loan volume to maintain capital ratios.’,
,
, ‘From next month, banks will calculate DSR internally for all new household loans without exception for internal management purposes. The financial authorities decided to analyze the impact not only on borrowers such as low-income and vulnerable groups, but also on the financial soundness of financial companies in multiple aspects to determine the timing and intensity of additional measures. Kwon Dae-young, head of the Financial Services Commission’s Secretariat, expressed expectations for banks to respond by thoroughly examining loan execution and limits through rigorous assessment of repayment capacity rather than focusing on loan interest rates.’,
,
, ‘Banks have already started tightening loans. Since July, major commercial banks such as KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup have decided on 20 rounds of interest rate hikes and are now introducing stronger measures to suppress loans. On this day, Shinhan Bank decided to temporarily suspend conditional rental deposit loans from the 26th. This includes conditions such as △ transfer of ownership to the landlord (buyer) △ cancellation or reduction of priority bonds △ housing disposal terms. This decision is in response to concerns that such loan products are being used for speculative demand, such as investing in housing through gap investments by utilizing rental deposits.’,
,
, ‘From the same day, Shinhan Bank also halted the Mortgage and Credit Insurance (MCI, MCG). MCI, MCG are insurances taken out simultaneously with housing mortgage loans, and without insurance, only the amount minus a small rental deposit can be loaned, effectively reducing the loan limit. The small rental deposit in Seoul is 55 million won.’,
,
, ‘In addition, Shinhan Bank will raise interest rates for housing and mortgage loans, including conditional rental deposit loans, by up to 0.4% points on the 23rd. This is the seventh interest rate hike in the second half of the year (July-December).’,
,
, ‘KB Kookmin Bank, in order to manage household loans, will increase the interest rates of some household credit loan products by 0.2% points starting from the 22nd. Previously, KB Kookmin Bank had raised interest rates for housing and rental deposit loans and also restricted housing loans for refinancing and multiple home owners.’,
,
,