It was calculated that household loans from the five major banks increased by about 42 trillion won last year. As the year progresses, banks that are freed from the burden of managing total loan volume are expected to loosen the bars and lower their lending thresholds.
According to the financial sector on the 1st, the household loan balance of the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) recorded 734.3995 trillion won as of December 30, 2024. This is an increase of KRW 41.9901 trillion from the end of 2023 (KRW 692.4094 trillion) and KRW 1.0608 trillion from the end of November (KRW 733.3387 trillion).
The annual increase in household loans from the five major banks was KRW 39.3764 trillion in 2019 and KRW 59.3977 trillion in 2020 during the Moon Jae-in administration. Afterwards, as the Bank of Korea raised the base interest rate (0.5 → 0.75% in August 2021), it slightly decreased to 38.899 trillion won in 2021, and decreased in that year as the base interest rate was raised seven times in 2022 (1.25 → 3.25%). (16.5194 trillion won). This trend continued until 2023 (-124.1 billion won).
Banks are planning to lower the household loan threshold, which has been raised since July and August of last year due to interest rate increases and limit reductions, starting from the new year. First, KB Kookmin, Shinhan, Hana, and Woori Bank decided to resume applying mortgage insurance (MCI/MCG) to new home mortgage loans. Mortgage insurance is insurance that is purchased when making a home loan, and when insurance is applied, the loan limit increases by more than 50 million won in the Seoul area. The limit on mortgage loans for livelihood stabilization funds, which was set at 100 million won, was also decided to be removed (Kookmin) or increased by 200 million won (Shinhan and Woori Bank).
Regulations on jeonse loans will also be relaxed. Shinhan and Woori Bank, which had restricted the handling of jeonse loans for those who own a single home, decided to lift related regulations. Starting this year, lease loans for newly-sold houses can also be received from Shinhan and Nonghyup Bank.
Meanwhile, the financial authorities are committed to managing the growth rate of household loans within the nominal gross domestic product (GDP) growth rate again this year. Furthermore, it was decided to deduct the excess amount from the new year’s loan volume to banks that exceeded last year’s household loan growth target. The targets are three commercial banks including Woori, Shinhan, and Hana, one internet bank, and some local banks. This is the first time that financial authorities are imposing such a penalty on the management targets presented by banks.
Reporter Shin Moo-kyung [email protected]
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