Household Loans Tighten as DSR-Exempt Loans Exceed 70%

In the second quarter, the proportion of household loans that are exempt from the total debt service ratio (DSR) regulation exceeded 70%. This increase is attributed to stricter overall household loan regulations, which have led to a rise in group loans and small loans that fall outside DSR requirements.

According to data submitted by the Bank of Korea to Rep. O Gi-hyeong of the Democratic Party, the proportion of DSR-exempt loans among new household loans in the financial sector was recorded at 70.5% in the second quarter, the highest level since statistics began being compiled in the third quarter of 2022.

The share of DSR-exempt loans was 60.5% in the first quarter of last year, dropping to 58.9% in the second quarter, then rising to 61.8% in the third quarter and 61.9% in the fourth quarter. This year, it increased to 63.9% in the first quarter and jumped by 6.6 percentage points in just one quarter.

The rise in DSR-exempt loans is seen as a result of banks focusing on essential funds for housing allocations and living expenses to manage overall household debt this year.

Notably, the share of interim and relocation loans exempt from DSR regulations surged from 14.1% in the second quarter of last year to 23.1% in the second quarter of this year, a 9 percentage point increase.

Loans under 100 million won also increased from 27.3% to 29.9%, a rise of 2.6 percentage points. Policy-targeted loans rose from 2.7% to 4.5%, an increase of 1.8 percentage points. In contrast, the share of jeonse loans decreased from 11.9% to 9.3%, a drop of 2.6 percentage points.

Based on total outstanding balances, the proportion of DSR-exempt loans also reached a record high. The share of DSR-exempt loans rose from 49.1% in the second quarter of last year to 50.4% in the first quarter of this year, and 51.2% in the second quarter.