In Stress DSR Level 2, Even 'Annual Salary of 100 Million Won' Faces Loan Limit Cut by 93 Million Won

Kang Ming-guk "Measures Must Be Sought for Actual Users"

With the implementation of the second phase of the stress Debt Service Ratio (DSR), the maximum mortgage loan limit that a person earning 100 million KRW annually can receive from domestic banks has been found to decrease by more than 90 million KRW.

According to data requested by the office of Kang Min-guk, a member of the National Assembly's Political Affairs Committee from the People Power Party, from the Financial Supervisory Service on the 22nd, after the implementation of the stress DSR phase 2 regulation, the loan limits by bank decreased by as little as 45 million KRW and as much as 93 million KRW. This assumes a financial consumer with no other loans, living in the metropolitan area, earning 100 million KRW annually, receiving a mortgage loan based on the COFIX (Cost of Funds Index) 6-month variable interest rate.

By bank, NH Nonghyup Bank saw the largest decrease in loan limits. The 40-year term mortgage loan limit at Nonghyup Bank was 821.5 million KRW under the stress DSR phase 1, but with phase 2 implementation, the loan limit decreased by 93 million KRW to 728.5 million KRW. Shinhan Bank’s mortgage loan limit decreased by about 69.5 million KRW, KB Kookmin Bank by 65.04 million KRW, Woori Bank by 64.8 million KRW, and Hana Bank by 57 million KRW.

When taking out a 30-year term mortgage loan, Nonghyup Bank also had the largest decrease in loan limits at 66.5 million KRW. The reductions followed in order: Shinhan Bank (53.3 million KRW), Kookmin Bank (50.18 million KRW), Woori Bank (50 million KRW), and Hana Bank (45 million KRW).

Since the 1st of this month, financial authorities have implemented the second phase of the stress DSR, applying higher additional interest rates to loans from banks and secondary financial institutions. This regulation adds an additional 0.75 percentage points to the interest rates on bank mortgage loans, credit loans, and secondary financial institution mortgage loans. For metropolitan area bank mortgage loans, an additional 1.2 percentage points is applied.

Assemblyman Kang Min-guk stated, "The implementation of stress DSR phase 2 and the strengthening of bank loan regulations may somewhat ease the increase in household debt," but expressed concern that "financial consumers may turn to relatively higher-interest loans from secondary financial institutions and private lenders to compensate for the shortfall in planned loan amounts, potentially leading to more serious household debt problems." He added, "Financial authorities should explore measures to ease loan regulations for genuine borrowers."