Financial Services Commission: "Segmenting Mortgage Loans for Monitoring... Proactive Response Needed from Financial Sector"

'Household Debt Inspection Meeting' Held
Monitoring Trends by Region in Detail

The Financial Services Commission, the main government agency responsible for household debt, recently announced that amid rising house prices centered around Gangnam following the lifting of the Land Transaction Permission System (Toheoje), it will closely monitor the trends of new mortgage loan applications and issuances by region for the time being.

On the 17th, the Financial Services Commission held a 'Household Debt Inspection Meeting' with related ministries including the Ministry of Economy and Finance, stating that "household loans in March have shown a stable trend so far as the new semester demand in February has ended."

Previously, the Financial Services Commission reported that household loans increased by 4.3 trillion won in February compared to the previous month. Household loans, which had decreased by 900 billion won in January due to effects such as holiday bonuses, shifted to an increasing trend last month. This was explained by the resumption of financial institutions' operations at the beginning of the year, a decline in loan interest rates, and moving demand related to the new semester, which led to an increase in mortgage loans.

At this meeting, there was consensus on the need to closely monitor and segment the trends of mortgage loan applications and new issuances for the time being.

This is because the scale of newly issued mortgage loans at the beginning of the year peaked in the last week of February and then shrank in March. Since the pattern of increase and decrease appeared uniformly across regions, the increase in household loans in February was judged to be mainly due to moving demand related to the new semester.

In particular, in Seoul, concerns about rising housing prices have intensified mainly in areas where regulations such as the Land Transaction Permission System have been eased. It was pointed out that the expectation of price increases could spread throughout the Seoul and metropolitan area housing markets, potentially affecting household loans as well.

Banks attending the meeting also stated that they are closely monitoring mortgage loan application trends and issuance status, considering the recent real estate market situation in the metropolitan area. Especially when handling housing-related loans in some parts of Seoul where prices have surged sharply in the short term, they are checking the potential impact on future risk levels. They plan to supply funds primarily to genuine buyers while taking immediate measures to prevent the expansion of related risks.

Kwon Daeyoung, the Secretary-General, emphasized, "Considering recent movements in the real estate market centered on Seoul, there is a possibility of an impact on household loans after March. For stable household loan management this year, it is necessary for the financial sector itself to proactively respond based on the market situation in March."

He added, "Amid the trend of interest rate cuts, as household loan management is strengthened in some regions, it is more important and necessary than ever for financial companies to exercise autonomous management with 'operational finesse' tailored to each situation to ensure that fund supply to genuine buyers is not disrupted. I urge frontline branches and field offices to manage household loans more actively and meticulously."