Conditional Mortgage Agreement Compliance Check... Corporate and Household Loan Risk Monitoring (Comprehensive)

Extension of Application Deadline for 'Period Industry Stabilization Fund' Approaching End of April

Do Gyu-sang, Vice Chairman of the Financial Services Commission [Photo by Yonhap News]

[Asia Economy Reporter Kwangho Lee] Financial authorities will begin checking compliance as the expiration of the agreement period for conditional mortgage loans with disposal and relocation conditions comes into full effect from the first half of this year. Additionally, if global interest rate hikes and synchronization with domestic interest rates occur, risks such as increased corporate financing costs and higher interest burdens on household loans may arise, prompting strengthened monitoring.

At the 36th Financial Risk Response Team meeting held on the 9th, Do Gyusang, Vice Chairman of the Financial Services Commission, stated, "The expiration of the disposal agreement period is expected to come into full effect from the first half of the year," and requested, "I ask the Financial Supervisory Service to thoroughly check for any violations of the agreement."

Vice Chairman Do also urged, "If non-compliance with the agreement is confirmed by banks, I hope they will promptly take necessary measures such as loan recovery without delay."

Previously, the government stipulated that one-homeowners receiving mortgage loans to purchase a house in all regulated areas must dispose of their existing home and relocate to the new home. Accordingly, major commercial banks have recorded 9,895 cases in the first half and 6,433 cases in the second half where the disposal agreement period is due. For the relocation agreement period, the numbers are 18,188 and 2,657 cases respectively.

The meeting also discussed financial support related to COVID-19.

Vice Chairman Do mentioned, "To support the efforts of financial institutions, we plan to improve evaluation indicators so that COVID-19 response efforts are reflected in the assessments of policy financial institutions and banks."

He continued, "Supporting our companies to proactively respond to environmental changes after COVID-19 is also a major task of this year's COVID-19 financial support," adding, "First, we will extend the application deadline for the Period Industry Stabilization Fund, which is scheduled to expire at the end of April, and review whether the fund can help companies rebound after COVID-19."

In conclusion, Vice Chairman Do emphasized, "If global interest rate hikes and synchronization with domestic interest rates occur, risks such as increased corporate financing costs and higher interest burdens on household loans may arise," and stated, "We will closely monitor financial market risk factors by sector and prepare to respond promptly when necessary."