2 to 3 Months Needed for Mortgage Approval After Toheoje Lifted
April to May Mortgage Trends Will Be a Turning Point
Financial Services Commission to Strengthen Regional Monitoring
In March of this year, total household loans across the entire financial sector increased by only 400 billion KRW compared to the previous month. Compared to February, when household loans surged by 4.2 trillion KRW from the previous month, the increase last month significantly slowed down. This was due to a substantial reduction in policy loans by banks and secondary financial institutions, which led to a decrease in the scale of mortgage loans.
However, to assess the impact following the lifting of the Land Transaction Permission System (Toheoje), the trend of household loans in April is crucial. Considering that it takes 2 to 3 months from loan consultation to approval, financial authorities explain that enhanced monitoring is necessary.
On the morning of the 9th, the Financial Services Commission and the Financial Supervisory Service held a household debt inspection meeting and announced the 'Household Loan Trends (Provisional) as of March 2025.'
Mortgage loans increased by 3.4 trillion KRW. Both bank mortgage loans (+3.4 trillion KRW → +2.2 trillion KRW) and secondary financial institution mortgage loans (+1.5 trillion KRW → +1.1 trillion KRW) saw a reduced increase compared to the previous month.
Other loans decreased by 300 billion KRW, expanding the decline compared to the previous month (-700 billion KRW). This was due to credit loans turning to a decreasing trend (+100 billion KRW → -1.2 trillion KRW), among other factors.
Trends in Household Loan Increases and Decreases by Loan Category in the Financial Sector up to March
By sector, bank household loans increased by 1.4 trillion KRW, narrowing the increase compared to the previous month (+3.3 trillion KRW). Secondary financial institution household loans (+900 billion KRW → -1 trillion KRW) shifted to a decreasing trend.
Looking at the detailed increase and decrease trends of bank household loans, policy loans increased by 1.5 trillion KRW compared to the previous month, which is a smaller increase than the previous month (+2.8 trillion KRW). On the other hand, banks' own mortgage loans increased by 700 billion KRW, slightly expanding the increase compared to the previous month (+600 billion KRW). Other loans such as credit loans saw an expanded decrease (-900 billion KRW) compared to the previous month (-200 billion KRW).
Regarding the increase and decrease trends by sector in secondary financial institution household loans, mutual finance increased by 300 billion KRW, narrowing the increase compared to the previous month (+800 billion KRW), savings banks decreased by 200 billion KRW, expanding the decrease compared to the previous month (-30 billion KRW). Credit card companies decreased by 900 billion KRW, shifting to a decreasing trend, and insurance (-100 billion KRW) maintained a similar decrease as the previous month.
Additionally, the Financial Services Commission reviewed the preparation status related to regulations. From May, the Korea Housing & Urban Guarantee Corporation (HUG)'s guarantee ratio for jeonse loans will be strengthened from 100% to 90%, and from July, the third stage of the Stress Total Debt Service Ratio (DSR) will be implemented.
Kwon Daeyoung, Secretary General of the Financial Services Commission, said, "Although household loans are showing a stable pattern, the active housing transactions resulting from the lifting of the Land Transaction Permission System (Toheoje) will be reflected in household debt statistics with some time lag," adding, "The period after April will be a critical turning point for future household loan management."
He emphasized, "We will closely examine whether a balloon effect is occurring in areas not designated as land transaction permission zones, in cooperation with the Ministry of Land, Infrastructure and Transport and other related agencies, and strengthen regional household loan monitoring together with the financial sector."
He continued, "In the second quarter, there is a possibility of loan interest rates falling due to expectations of additional rate cuts, so the financial sector must manage household loans more proactively and autonomously according to monthly and quarterly management targets," and added, "We will also faithfully implement key tasks presented in this year's household debt management plan, such as expanding long-term fixed-rate mortgage loan products, strengthening income data management for all household loans, and building real estate-linked loan infrastructure."
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