Signals of Relief for 'Loan Cliff'…Attention Focuses on Authorities-Banks Consultations

NH NongHyup Bank is abruptly resuming the issuance of variable-rate mortgage loans.

This is drawing attention as it marks the first policy change by the banking sector since the government announced it would ease regulations on the total volume of household loans this year.

According to the financial sector on the 19th, NH NongHyup Bank plans to resume issuing its variable-rate mortgage product, "NH Mortgage Loan," starting tomorrow (the 20th).

The bank has decided to lift its self-imposed restrictions two and a half months after limiting the issuance of new loans starting June 1st as part of total volume management.

It is reported that NH NongHyup Bank once significantly exceeded its annual household loan growth target agreed upon with financial authorities, but subsequently regained stable levels through intensive credit tightening.

A bank official explained, "We are resuming issuance to provide stable financial support centered on genuine demand."

However, the bank remains cautious about further easing its self-imposed regulations, as household loan balances could surge again at any time.

To reduce mortgage limits, NH NongHyup Bank currently restricts enrollment in mortgage insurance (MCI and MCG) unless it is for balance payments or policy loans.

The maximum limit for credit loans has been lowered to 100 million won.

The limit for revolving credit lines (minus-tongjang) has also been capped at 100 million won or half of the annual income.

The Financial Services Commission previously announced on the 13th that it will double this year's target for the household debt total volume growth rate from the existing 1.5% to 3.0%.

Consequently, new lending capacity across the entire financial sector is estimated to be around 30 trillion won, and the top five commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup) are also expected to be able to provide an additional 7.5 trillion won in loans, primarily focusing on housing supply-related loans.

Financial authorities are calling together officials from the financial sector today to hold a working-level meeting for adjusting individual companies' total volume targets.

The authorities are expected to assess the approval status of balance payment loans and other types of loans by each bank to reflect them in the new targets, in line with the initial objective of promoting housing supply and supporting genuine demand.

The household loan growth rate targets for the top five banks, which stood at around 0.6% to 0.7% compared to the end of last year, are likely to increase by up to twofold.

The banking sector forecasts that these targets will take shape within two to three weeks.

Observations suggest that depending on the results of consultations with the authorities, other banks may also sequentially ease some of their existing lending restrictions.

(Photo provided by NH NongHyup Bank, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.