Demand Shifts Amid Bank Loan Regulations; Shinhyup Limits Online Loans

As major banks tighten household loan management, borrowers struggling to secure funds are turning to other banks with more lending capacity. In response, some financial institutions are beginning to limit the sale of online loan products to manage demand.

On July 26, Shinhyup Bank temporarily suspended new sign-ups for its 'Sh Dream Unsecured Loan' product through loan comparison platforms like Toss and Bank Salad. This online product, which offered up to 230 million won in unsecured loans and a maximum of 50 million won for overdraft accounts, was restricted due to anticipated high demand.

A Shinhyup Bank official stated, "When applications for online products surge simultaneously through the app, it becomes difficult to manage the limits, so we have halted product exposure on loan comparison platforms. The limits set by household loan management regulations are gradually being exhausted."

However, Shinhyup Bank continues to sell loans through its website and app with a daily handling limit. Additionally, some loan products, such as the 'Sh Easy e-Mortgage' with a maximum loan-to-value (LTV) ratio of 70% and the 'Hey Jeonse Fund Loan' available up to 500 million won, have also suspended online applications.

This shift in demand to other financial institutions is attributed to major banks having exhausted a significant portion of their annual household loan growth targets while raising lending thresholds. According to the Bank of Korea's economic statistics system, the balance of housing-related loans from non-bank deposit-taking institutions, such as savings banks and mutual finance, increased by 10.5% (14.1 trillion won) to 148.1 trillion won at the end of May compared to the end of last year. The increase in household loans from insurance companies also rose slightly from 900 billion won in May to 1 trillion won in June.

Seo Ji-yong, a professor at Sangmyung University, noted, "The decision by Shinhyup Bank to set limits on online loan products is a balloon effect caused by the tightening of loans at major banks, leading demand to shift to other financial institutions. As authorities expand total volume regulations to include mutual finance and savings banks, it is likely that we will see a 'soft' balloon effect where demand shifts rather than a 'strong' balloon effect where it concentrates in one place."