Joint Household Debt Inspection Meeting Held by Relevant Agencies
Applying the Principle: "Borrow Only What You Can Repay, and Start Repaying from the Beginning"
Kwon Daeyoung, Secretary General of the Financial Services Commission, chaired the Household Debt Inspection Meeting on the afternoon of the 3rd at the Government Seoul Office in Jongno-gu, Seoul. Photo by Financial Services Commission.
The Financial Services Commission announced that it held a joint "Household Debt Inspection Meeting" with relevant agencies at the Government Seoul Office on the 3rd, chaired by Secretary General Kwon Daeyoung.
Participants in the meeting reviewed the trends in household loans for June, discussed the implementation status of the recently announced "Measures to Strengthen Household Debt Management," examined the situation at frontline service windows, and deliberated on plans for intensive inspections of illegal, unlawful, and abnormal real estate transactions.
The attendees assessed that, due to the continued increase in housing transactions since February, the growth in household loans?centered on mortgage loans?has persisted through June. Taking into account the typical time lag of two to three months between housing transactions and loan execution, they projected that the upward trend in household loans could continue into July as well.
Kwon Daeyoung emphasized, "The cycle of overheating and stagnation in the housing market has been repeatedly driven by the practice of purchasing homes with excessive debt leveraged beyond repayment capacity. Now is the time to break this vicious cycle."
He added, "Financial authorities will move away from these misguided practices and firmly establish the consistent principle in the market that 'one should only borrow what one can repay, and begin repaying from the outset.' This will ensure that limited lending resources do not fuel the housing market but instead flow into productive sectors such as the capital market and businesses, rather than speculative areas."
He further stated, "This set of measures focuses policy efforts on restricting additional home purchases by multiple homeowners and non-essential loans within the Seoul metropolitan area. During the process of strengthening autonomous management measures within the financial sector, I urge financial institutions?who know their customers and the field best?to exercise meticulous care so that genuine homebuyers, ordinary citizens, and vulnerable groups are not adversely affected."
Relevant agencies present at the meeting?including the Financial Services Commission, Ministry of Land, Infrastructure and Transport, National Tax Service, Seoul Metropolitan Government, and Financial Supervisory Service?agreed to further strengthen inter-agency cooperation and enhance their response to illegal, unlawful, and abnormal real estate transactions.
The Financial Supervisory Service plans to significantly strengthen inspections to ensure that business loans are not used for unauthorized purposes (for example, using business loans to purchase homes). If illegal activities are detected, the relevant loan amounts will be immediately recalled, and new loans will be prohibited for a set period (one year for the first violation, five years for the second violation).
The National Tax Service will conduct a thorough analysis of the sources of funds for high-priced homes using financing plans and will closely examine whether tax filings have been properly made. In particular, if it is confirmed that funds for acquisition have been illicitly gifted from parents or income has been omitted, strict tax investigations will be carried out.
The Ministry of Land, Infrastructure and Transport, in cooperation with local governments such as the Seoul Metropolitan Government and the Korea Real Estate Board, will analyze financing plans and actual transaction data to focus inspections on cases of illicit gifting, suspicious sources of funds, false contract reports, and price manipulation contracts (up/down contracts). If any illegal activities are identified, they will notify the relevant local governments and agencies and request investigations.
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