Major banks that had increased their capacity to supply household loans in consultation with financial authorities are quickly exhausting their additional lending limits, indicating that the barriers to obtaining loans will become even higher as the year progresses. As banks are expected to allocate remaining supply conservatively, borrowers seeking mortgage loans will need to consider not only loan limits and interest rates but also the timing of loan execution.
As of September 28, the outstanding household loan balance at KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup banks stood at 780.48 trillion won, an increase of 12.8 trillion won (1.7%) from 767.68 trillion won at the end of last year. Of this amount, housing-related loans alone increased by 9.26 trillion won.
At the end of last month, the five major banks agreed with financial authorities to raise their annual household loan growth target from approximately 4.33 trillion won to about 7.11 trillion won. However, as of September 17, the increase in household loans, excluding policy-based loans, had already reached 7.29 trillion won, surpassing the newly set annual target, indicating a tight lending capacity.
Consequently, banks are expected to adjust the pace of new loan approvals to manage the increase in household loans for the remainder of the year. Some banks have already begun to reduce mortgage loan limits or allocate household loan limits by branch, considering the total amount remaining until year-end. This could lead to situations where even borrowers with sufficient income and collateral may not be able to secure the desired amount when needed.
If banks reduce the range of preferential interest rates during this management process, the effective interest rates for borrowers could rise. The average adjusted interest rate for new mortgage loans issued by the five major banks in July was 1.73%, down 0.03 percentage points from the end of last year.
As there are differences in lending capacity among banks, a concentration of loan demand at banks with remaining limits is anticipated. If applications become concentrated at specific banks, those banks may also limit new applications based on the total amount remaining until year-end.
As the barriers to bank loans increase, a 'balloon effect' is expected to intensify, with demand shifting to the secondary financial sector. According to financial authorities, the increase in household loans in the secondary financial sector reached 13.5 trillion won from the beginning of the year to August, significantly surpassing last year's total increase of 5.1 trillion won.
A representative from a commercial bank stated, "The year-end household loan 'shutdown' has become a constant rather than a variable, and consumers are becoming increasingly aware that obtaining loans may be difficult by year-end. Many borrowers currently executing mortgage loans applied around June, so those needing loans this year should expedite consultations and applications."
* This article has been translated by AI.
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