The delinquency balance for housing mortgage loans in the banking sector has increased at a faster rate than the growth of loans. Jeonbuk Bank has reported substantial delinquencies in some new group housing loans, causing its mortgage delinquency rate to rise fivefold in just six months. As the supply of group and balance loans is expanded to prevent delays in new apartment move-ins, there are calls for enhanced risk management at individual project sites.
On September 8, Park Seong-hoon, a member of the National Assembly's Political Affairs Committee from the People Power Party, revealed data from the Financial Supervisory Service regarding the soundness of domestic bank housing mortgage loans. According to the report, the balance of housing mortgage loans at domestic banks increased by 21% from 644.3 trillion won at the end of 2022 to 779.2 trillion won by the end of June this year.
During the same period, the balance of mortgage loans that were overdue for more than one month rose by 120%, from 1 trillion won to 2.2 trillion won. The calculated delinquency rate also increased by 0.12 percentage points, from approximately 0.16% to 0.28%. While the loan balance grew by 21%, the delinquency balance surged by 2.2 times.
Among banks, Jeonbuk Bank's increase in delinquency rates was particularly notable. The delinquency balance for Jeonbuk Bank's mortgage loans rose from 5.26 billion won at the end of last year to 32.81 billion won by the end of June, marking a 6.2-fold increase in just six months. During the same period, the delinquency rate jumped from 0.19% to 0.95%, the highest among domestic banks.
The Financial Supervisory Service explained that the rise in Jeonbuk Bank's delinquency rate was due to significant delinquencies in some new group housing loans this year, leading to a sharp increase in the delinquency balance. However, the specific number of projects, their locations, types of loans, and the exact reasons for the delinquencies were not disclosed. It remains unclear whether the issues are due to temporary delays in move-ins or refinancing, or if they indicate a genuine deterioration in the repayment capacity of buyers.
Group loans are loans provided by financial institutions to multiple buyers for down payments or final payments, based on agreements with specific housing projects. While assessments of individual borrowers' qualifications and repayment abilities are conducted, the concentration of loans in the same project means that if issues arise, delinquencies can increase significantly.
It is still difficult to determine whether the situation at Jeonbuk Bank is a temporary phenomenon limited to specific projects or a sign of broader issues linked to the sluggish local housing market. The lack of publicly available data on specific projects and delinquency reasons, as well as insufficient comparative data on delinquency rates in group loans from other banks, complicates the assessment.
However, as the government has instructed banks to expand group and balance loan supplies to prevent delays in new apartment move-ins due to household loan volume management, there are calls to jointly assess risks at individual projects. While an increase in loan supply does not necessarily equate to a rise in delinquencies, it is essential to thoroughly examine factors such as occupancy rates, surrounding housing prices, collateral values, and the repayment abilities of buyers.
Park Seong-hoon stated, "The overall housing mortgage loans have increased by about 20% since the end of 2022, but the delinquency balance has more than doubled, which is a warning sign that households' repayment capacities are not keeping pace with the growth of loans. The financial authorities must proactively assess the risks of vulnerable borrowers and group loan delinquencies."
* This article has been translated by AI.
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