**The Increase in Bank Mortgage Loans Drops to 700 Billion Won:**
– **Strengthened Loan Regulations and Housing Market Slump**
Due to the government’s strengthened loan regulations, the increase in general mortgage loans in the banking sector significantly decreased last month. The photo shows an apartment complex viewed from Namsan, Seoul. [Yonhap]
[Herald Economy, Reporter Jo Beom-ja] The combination of the government’s tightened loan regulations and a slowdown in housing transactions resulted in the increase in general mortgage loans intended for home purchases in the banking sector being limited to around 700 billion won last month.
According to financial industry sources and authorities as of the 2nd, general mortgage loans for home purchases in the banking sector increased by about 700 billion won in October (from the 1st to the 30th, based on 17 business days).
This is a decrease of more than 40% compared to the same period the previous month (+1.2 trillion won). There has been a clear declining trend following August’s (+2.9 trillion won) and September’s (+2 trillion won) figures.
The government’s strong ‘loan tightening’ measures, such as the June 27 and October 15 policies, along with banks managing household loan volumes towards year-end, have notably slowed down the growth of general mortgage loans.
Housing transactions themselves have also significantly contracted.
According to the Ministry of Land, Infrastructure and Transport, the metropolitan area’s apartment transaction volume was 34,000 units in June, 26,000 in July, and 15,000 in August, indicating a rapid decline.
Typically, there is a 2-3 month lag between the signing of sales contracts and the execution of loans, so this reduction in transactions has evidently been reflected in the mortgage loan figures.
Banks are likely to continue raising loan thresholds towards the end of the year, as they need to meet their annual household loan target submitted to the financial authorities.
Following the banking sector, even institutions such as insurance companies in the secondary financial sector are closing loan channels. Samsung Fire & Marine Insurance suspended new applications for mortgage loans through its non-face-to-face channels as of October 30.
A representative of Samsung Fire & Marine stated, “This is a measure due to full utilization of loan limits,” adding that “face-to-face channels will be operated flexibly.”
As loan thresholds rise, ‘balloon effects’ are emerging, such as a surge in applications for auto collateral loans from savings banks and mutual finance companies.
According to data received by the office of Kim Sang-hoon from the People Power Party from the Financial Supervisory Service, a total of 248,000 applications for personal auto collateral loans were received by savings banks approximately two months after the implementation of the June 27 regulations.