Household Loans Surge by 7.6 Trillion Won in One Month; Banks Tighten Lending

[Anchor]

Household loans have increased by 7.6 trillion won in just one month. Mortgage loans, in particular, saw a significant rise, prompting banks to begin tightening their lending criteria.

Reporter Min Gyeongho has the story.

[Reporter]

Starting today, July 10, KB Kookmin Bank is capping its mortgage loan limit at 300 million won, regardless of the region.

Currently, when purchasing a home in the Seoul metropolitan area or regulated zones, borrowers can receive up to 600 million won for properties valued at 1.5 billion won or less, and up to 400 million won for those valued at 2.5 billion won or less. However, the bank has decided to reduce these limits on its own.

[Prospective Homebuyer: I visited the bank to apply for a mortgage loan because it is the last chance to get the 600 million won limit. I came in a rush today after reading news about the limit reduction.]

Other commercial banks have also begun temporarily suspending loans processed through loan solicitors or restricting enrollment in mortgage insurance, which effectively increases the mortgage loan limit.

Banks are raising the barriers to lending due to the rapid growth in household debt.

As of the end of last month, household loans at deposit-taking banks increased by 7.6 trillion won compared to the end of May.

This marks the largest monthly increase in 22 months, with mortgage loans accounting for 4.3 trillion won of that total.

Analysts suggest that the increase is driven by a rise in property transactions ahead of measures to impose heavier capital gains taxes on multi-home owners, as well as the recent rise in housing prices in the Seoul metropolitan area.

Banks are taking preemptive measures because if this trend continues, there is a high possibility that their annual lending limits will be exhausted before the end of the year.

However, there are concerns about potential side effects, such as demand shifting to financial institutions with less favorable loan conditions following the news of the limit reductions.

[Jung Hwa-young, Research Fellow at Korea Capital Market Institute: If these changes happen suddenly, it can disrupt plans for purchasing a home, and it may also lead to a rush of demand from people wanting to secure loans in advance while they still can.]

With the recent volatility in the stock market highlighting the risks of so-called debt-financed investing, financial authorities have ordered not only banks but also non-banking financial institutions, such as insurance and credit card companies, to make efforts to manage household loans.

(Video reporting: Kim Se-kyung, Video editing: Jung Yong-hwa)
※ Please note: This article was translated by AI and may contain errors.