Credit Loans Surging by 1.5 Trillion Won in a Week... Loans Exceeding Double Annual Salary Blocked Starting Tomorrow

[Image source=Yonhap News]

[Asia Economy Reporter Jo Gang-wook] Starting tomorrow, credit loans exceeding 100 million won or double the annual income will be restricted. This is a preemptive measure taken by major commercial banks a week ahead of the government's strengthened household loan management plan, which will be implemented from the 30th to stabilize the real estate market.

According to the financial sector on the 22nd, major commercial banks decided to tighten lending on their own after credit loans surged by as much as 1.5 trillion won within just one week following the authorities' regulatory announcement.

KB Kookmin Bank plans to significantly strengthen the screening of credit loans exceeding 100 million won and those exceeding 200% of annual income starting from the 23rd.

For borrowers whose combined credit loans from KB Kookmin Bank and other banks exceed 100 million won, the 'Debt Service Ratio (DSR) within 40%' regulation will be applied. While the authorities have announced that the 'DSR 40% for credit loans exceeding 100 million won' will be uniformly applied from the 30th targeting high-income earners with annual income of 80 million won or more, Kookmin Bank intends to apply the regulation regardless of income if the credit loan exceeds 100 million won.

Additionally, KB Kookmin Bank will only provide credit loans within 200% of annual income starting from this day. This is intended to curb excessive credit loans relative to income.

Woori Bank also plans to shorten the schedule and implement regulations on credit loans exceeding 100 million won as soon as the related IT system development is completed.

NongHyup Bank is also suppressing credit loans by reducing loan limits and preferential interest rates. From the 18th, preferential interest rates for prime credit loans and general credit loans were cut by 0.2 percentage points and 0.3 percentage points, respectively. Furthermore, from the 20th, the credit loan limit for high-income earners with an annual salary exceeding 80 million won was reduced to 'within twice the annual income.'

For example, previously, the maximum limits were applied per credit loan product, such as 200 million won for the professional-targeted Shupo Pro Loan and 250 million won for the doctor-targeted Medi Pro Loan, but now, regardless of the product, credit loans exceeding twice (200%) the annual salary will not be allowed.

As of the 19th, the outstanding balance of credit loans at the five major banks?KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup?stood at 131.0354 trillion won, a surge of 1.5301 trillion won in just seven days compared to 129.5053 trillion won on the day before the regulation announcement (the 12th). The daily number of new overdraft account openings at these five banks also nearly doubled from 1,931 on the 12th to 4,082 on the 18th.

A financial sector official explained, "This preemptive action by banks appears to be due to a significant increase in demand to catch the last train for loans following the authorities' credit loan regulation announcement, raising the possibility that the total loan volume target for this year may not be met by the end of the year."