Banks to Resume Jeonse Loans and Ease Limits Starting Next Week (Comprehensive)

Seoul apartment prices have risen by 150 million won this year, approaching an average of 1.2 billion won.
[Photo by Yonhap News]

[Asia Economy Reporter Seongpil Cho] As financial authorities have decided to exempt jeonse loans from the total volume management limit regulation, banks will resume jeonse loans and ease loan limits starting next week.

NH Nonghyup Bank announced on the 14th that it will resume the suspended jeonse deposit loans from the 18th. This follows the decision by financial authorities and the five major commercial banks to exclude jeonse loans for low-income real demand borrowers from the total volume management limit (growth rate in the 6% range) for the fourth quarter of this year to prevent suspension of jeonse loans. Previously, NH Nonghyup Bank had announced that it would suspend new secured loan sales, including jeonse loans, from August 24 to November 30 as the household debt growth rate exceeded 7%.

Shinhan Bank and Woori Bank have taken steps to ease jeonse loan limits. Shinhan Bank decided to lift the 500 billion KRW limit applied to jeonse loans through agents starting this month. Woori Bank plans to allocate additional jeonse loan limits exclusively to real demand borrowers. Since last month, Woori Bank has been managing total loan volume by applying loan limits ranging from 500 million to several billion KRW per branch monthly.

Hana Bank plans to continue its policy of granting jeonse loans only within the range of the increased rental deposit (jeonse price) starting from the 15th. Earlier this month, Hana Bank announced that it would partially restrict loan limits in this manner to manage total household loans.

Meanwhile, the Financial Services Commission, Financial Supervisory Service, Korea Federation of Banks, and the five major commercial banks including Nonghyup, Shinhan, Kookmin, Woori, and Hana agreed at a meeting held today to ensure the smooth supply of jeonse and balance payment loans and to recognize the exemption of total volume regulation for jeonse loans.