Just one day after Financial Supervisory Service Governor Lee Bok-hyun announced that he would strengthen intervention in banks by taking additional measures, saying, “Raising housing mortgage loan interest rates is not what the authorities wanted” in relation to the surge in household loans, the banking industry has responded quickly by preparing additional “loan tightening” measures.
Banks are reducing the limit on housing mortgage loans for the purpose of living safety funds, shortening the loan period for housing mortgage loans located in the metropolitan area, and also discontinuing guarantee insurance products one after another.
According to the financial sector on the 26th, Kookmin Bank announced additional ‘household debt management measures centered on actual demanders’. This is an additional measure following the restriction on handling of housing purchase loans for multiple homeowners and new handling of housing loans for refinancing with other banks on the 29th of last month.
First, from the 29th, we will stop handling MCI and MCG, which are surety insurance products. MCI and MCG are insurance products that you sign up for at the same time as a housing mortgage loan. If you don’t have insurance, you can only borrow the amount minus the small rental deposit, which can reduce the loan limit. It is known that the loan limit will be reduced by 55 million won for apartments in the Seoul area and 25 million won for those in the provinces. Shinhan Bank stopped handling MCI and MCG from that day, and Kookmin Bank has also joined.
The maximum loan period for housing mortgage loans in the metropolitan area will also be reduced to 30 years. Previously, it was 50 years for young people (34 years old or younger) and 40 years for others, but it will be reduced to 30 years across the board.
The limit for the purpose of living stability funds is limited to 100 million won. Previously, there was no separate limit, but this year, including loans handled, the limit is set at 100 million won per property. However, living stability fund loans for the purpose of returning rental deposits can be handled in excess of the maximum loan limit.
Mortgage loans for bare land (land without buildings on the ground) will also be suspended. This applies to fields, rice paddies, and orchards, excluding land for large-scale industrial use.
The overdraft account limit will also be limited. Previously, it was 100 million to 150 million won, but it will be reduced to 50 million won. Refinancing of housing loan from other banks will also be prohibited.
Kakao Bank, an internet-only bank, raised its mortgage interest rate by 0.5%p at once. The fixed-term (5-year) mortgage interest rate rose from 3.571-5.836% the previous day to 4.074-6.338%. The lower end exceeded 4%, and the upper end exceeded 6%. This reflects the fluctuation of the 5-year financial bond, which is the interest rate standard, and the increase in the premium rate.
In addition, the monthly rent loan interest rate was also raised by 0.1 to 0.5%p. Kakao Bank raised the interest rate on its housing loan products by 0.1%p on the 26th of last month and by 0.2%p on the 14th.
Banks have been controlling household debt by raising the mortgage interest rate, but they are not only reducing the loan limit, but also tightening the jeonse loan and credit loan. When the chairman said that the banks’ mortgage interest rate hike was not what the authorities wanted, he ordered them to take a cautious stance on DSR management and gap investment loans, and the banks responded immediately.
The previous day, Director Lee appeared on KBS’s “Sunday Diagnosis Live” and said, “(The Financial Supervisory Service) did not intervene in the part where it makes judgments in terms of autonomy based on the bank’s real estate and household loan situations,” and “If there is criticism that the bank raised interest rates too easily, I think we should intervene more strongly in the future.”
He continued, “I know there is criticism that the policy is inconsistent as banks are raising their lending rates despite the market interest rate decline,” but explained, “However, the recent increase in household lending rates by banks is not what the government wanted.” He added, “The Financial Supervisory Service hoped that banks would take a cautious approach to autonomous DSR management and gap investment loans and systematically manage their portfolios.”
As Kookmin Bank is quickly coming up with additional response measures in line with the government’s keynote, this trend is expected to spread to other banks.
For example, Shinhan Bank has decided to stop handling ‘conditional jeonse loans’ that it had allowed until now. The conditions are △transfer of ownership by the lessor (buyer), △cancellation or reduction of senior debt, and △disposal of the house. The jeonse loans with ‘conditions’ that Shinhan Bank has decided to stop handling are those that can be used for speculative loans such as gap investment (sales with jeonse).
In addition, the handling of ‘trust registered property lease loans’ where ownership is transferred to a trust company will also be discontinued. Previously, only lease loans guaranteed by Seoul Guarantee Insurance and Urban Guarantee Corporation were unavailable for handling, but from this day on, housing finance corporation guarantees will also be unavailable for handling.
(Seoul = News 1)
2024-08-26 09:02:37