Under the government's stringent household loan regulations, subscription mortgage loans and insurance policy loans are rapidly increasing. As home prices in Seoul continue to rise and loan interest rates remain high, borrowers are utilizing their financial assets to secure funds. Despite efforts to tighten overall loan volumes, the demand for household financing shows little sign of decreasing.
As of the end of last month, the total balance of subscription mortgage loans at the five major banks—KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup—was recorded at 4.4841 trillion won, an increase of 518 billion won (13.1%) from the same period last year, and up 404 billion won (9.9%) since the beginning of the year.
The average loan amount per account using subscription mortgage loans has also increased. The average balance per account at the five major banks was approximately 2.99 million won at the end of last month, up about 150,000 won from the same time last year (approximately 2.84 million won).
Subscription mortgage loans are secured loans based on funds accumulated in housing subscription accounts, allowing borrowers to access about 90-95% of their contributions. Unlike general credit loans, these secured loans are exempt from the total debt service ratio (DSR) regulations, making them an attractive option as loan restrictions tighten.
Financial experts interpret this trend as borrowers turning to relatively accessible secured loans as banks raise their lending thresholds.
This trend is also evident in the insurance sector. According to data submitted by the Financial Supervisory Service to Park Seong-hoon, a member of the National Assembly's Political Affairs Committee, insurance policy loans increased to 754.1 billion won in May, 1.0145 trillion won in June, and 696.1 billion won in July. The total increase over three months reached 2.4647 trillion won. Insurance policy loans allow borrowers to secure funds using the surrender value of their policies without canceling them, similar to subscription mortgage loans, thus maintaining existing financial assets while ensuring liquidity.
The reliance on financial assets for funding indicates that household financial demand and burdens remain significant. With home prices continuing to rise, particularly in Seoul, and high loan interest rates persisting, the financial strain on households shows no signs of easing. According to the Korea Real Estate Agency, as of August 28, the average sale price of apartments in Seoul rose by 0.09% from the previous week, marking the 86th consecutive week of increases since the first week of February last year. The upper limit of mortgage rates at the five major banks is already approaching 7% per annum.
In a situation where both home prices and interest rates are rising, the ongoing demand for household financing suggests that if loan supply is merely restricted, borrowers may turn to alternative funding sources.
Experts argue that simply suppressing loan supply will not alleviate household financial burdens. They note that as real demand for housing purchases and living expenses persists, restricting one type of loan may lead to a shift in demand to less regulated alternatives.
Jo Dong-geun, an emeritus professor of economics at Myongji University, stated, "When one type of household loan is restricted, a balloon effect may occur, causing demand to shift to other loans. The increase in subscription mortgage loans and insurance policy loans reflects a heightened dependency on loans as household financial capacity diminishes."
As of the end of last month, the total balance of subscription mortgage loans at the five major banks—KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup—was recorded at 4.4841 trillion won, an increase of 518 billion won (13.1%) from the same period last year, and up 404 billion won (9.9%) since the beginning of the year.
The average loan amount per account using subscription mortgage loans has also increased. The average balance per account at the five major banks was approximately 2.99 million won at the end of last month, up about 150,000 won from the same time last year (approximately 2.84 million won).
Subscription mortgage loans are secured loans based on funds accumulated in housing subscription accounts, allowing borrowers to access about 90-95% of their contributions. Unlike general credit loans, these secured loans are exempt from the total debt service ratio (DSR) regulations, making them an attractive option as loan restrictions tighten.
Financial experts interpret this trend as borrowers turning to relatively accessible secured loans as banks raise their lending thresholds.
This trend is also evident in the insurance sector. According to data submitted by the Financial Supervisory Service to Park Seong-hoon, a member of the National Assembly's Political Affairs Committee, insurance policy loans increased to 754.1 billion won in May, 1.0145 trillion won in June, and 696.1 billion won in July. The total increase over three months reached 2.4647 trillion won. Insurance policy loans allow borrowers to secure funds using the surrender value of their policies without canceling them, similar to subscription mortgage loans, thus maintaining existing financial assets while ensuring liquidity.
The reliance on financial assets for funding indicates that household financial demand and burdens remain significant. With home prices continuing to rise, particularly in Seoul, and high loan interest rates persisting, the financial strain on households shows no signs of easing. According to the Korea Real Estate Agency, as of August 28, the average sale price of apartments in Seoul rose by 0.09% from the previous week, marking the 86th consecutive week of increases since the first week of February last year. The upper limit of mortgage rates at the five major banks is already approaching 7% per annum.
In a situation where both home prices and interest rates are rising, the ongoing demand for household financing suggests that if loan supply is merely restricted, borrowers may turn to alternative funding sources.
Experts argue that simply suppressing loan supply will not alleviate household financial burdens. They note that as real demand for housing purchases and living expenses persists, restricting one type of loan may lead to a shift in demand to less regulated alternatives.
Jo Dong-geun, an emeritus professor of economics at Myongji University, stated, "When one type of household loan is restricted, a balloon effect may occur, causing demand to shift to other loans. The increase in subscription mortgage loans and insurance policy loans reflects a heightened dependency on loans as household financial capacity diminishes."
* This article has been translated by AI.
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