No Exceptions for Professionals... Banks Reduce Credit Loan Limits to 'Within Annual Income'

Prospective Doctors and Lawyers Excluded from Loan Eligibility List

[Asia Economy Reporter Kim Jin-ho] Even doctors and lawyers, who represent high-income and high-credit individuals, will face a lending freeze starting this year. It is analyzed that banks have introduced stricter management guidelines to meet the more stringent household loan growth rate target (4-5%) compared to last year.

According to the financial sector on the 2nd, following Woori Bank, other major commercial banks are expected to lower the credit loan limit exclusively for doctors to within 100% of their annual income starting tomorrow. Usually, credit loans exclusively for doctors have included prospective doctors who have obtained a medical license, granting them preferential treatment in terms of loan limits and interest rates.

However, from this year, the loan limits and eligible borrowers will be significantly reduced in accordance with the financial authorities' strengthened household debt management guidelines. This is based on the financial authorities' judgment that loans to high-income and high-credit individuals have driven the rapid increase in household debt. The Financial Services Commission is reported to have recently delivered these guidelines to the banking sector.

Earlier, Woori Bank announced that starting from the 3rd of this month, it will lower the limit of the credit loan product "Woori Special Loan," targeted at professionals such as doctors and lawyers, to within 100% of annual income. Additionally, previously, even without income, having a medical license or lawyer's certificate allowed loans within a certain limit, but this will now be restricted. Even if qualified, those without income will no longer be able to receive loans.

Specifically, loans were provided to prospective doctors and prospective legal professionals for tuition and living expenses, but from next year, only student loans will be exceptionally allowed. However, borrowers must submit income verification documents such as income certificates, and loans will only be possible if it is confirmed that there is no income.

Meanwhile, the financial authorities plan to keep the household loan growth rate in the banking sector at around 4-5% annually this year. This is tighter than last year's target growth rate (5-6%), and next year, jeonse loans will also be included in the growth rate, making borrowing even more difficult.

Considering the household loan balance at the end of last year and the financial authorities' target growth rate of 4-5% for this year, the supply volume this year is estimated to be around 65 trillion to 97 trillion KRW.