With additional household loan limits allocated, banks are expected to ease some lending restrictions. However, due to rising benchmark rates, interest rates for mortgage and credit loans are projected to approach 7-8%, which may not significantly reduce the burden on borrowers.
According to the financial sector on August 28, financial authorities notified banks this week about the allocation of additional household loan limits. It is reported that no specific limit was set for balance loans, allowing banks to monitor and manage them autonomously.
In recent months, banks have implemented various restrictions to meet household loan limits. KB Kookmin Bank reduced the limit for mortgage loans aimed at home purchases from 600 million won to 300 million won starting July 10. Shinhan Bank has restricted participation in mortgage credit insurance (MCI) and mortgage credit guarantees (MCG). Hana Bank has halted new mortgage and jeonse loan applications through loan brokers for loans executed in November. Woori Bank has also limited MCI and MCG participation and capped housing-related loan processing at 1 billion won per branch per month.
As additional limits are allocated, attention is focused on whether banks will relax these restrictions. NH Nonghyup Bank resumed offering variable-rate mortgage loans on August 20, but other major banks have maintained their existing restrictions.
The banking sector plans to gradually increase lending, focusing on young people and low-income individuals, rather than lifting all restrictions at once. A financial sector official stated, “As the government has called for an expansion of loans for young people and those with low credit scores, we will start by increasing related loans.”
There is also interest in whether internet-only banks will ease their lending restrictions. KakaoBank and Toss Bank have reduced the limits on overdraft accounts, while K Bank has decided to suspend new overdraft account sales until next month. Internet banks have a daily loan limit, making it virtually impossible to open an overdraft account without an 'open run.'
However, with the allocation of additional household loan capacity, internet banks may also have the opportunity to expand their limits again. A financial sector official noted, “Since it has not been long since we received the additional limits, we will monitor market conditions as we ease lending.”
While banks' lending capacity has increased, the ongoing rise in interest rates means that borrowers may not feel a significant reduction in their financial burden.
As of today, the fixed-rate mortgage rates at the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) range from 4.72% to 7.17%. The upper limit, which had dropped to 7.16% on August 20, has rebounded.
The Bank of Korea raised the benchmark rate from 2.75% to 3.00% on August 27, following a previous increase on July 16, leading to predictions that fixed-rate mortgage rates could exceed 8%. The credit loan rates (6-month variable) at the five major banks are reported to range from 4.74% to 5.94%, with expectations that credit loan rates could approach 7%.
* This article has been translated by AI.
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