The financial authorities are maintaining their management stance on household debt while preparing measures to prevent a 'loan cliff' that would hinder access to loans for low-income individuals and genuine borrowers. The aim is to prevent excessive capital from flowing into real estate while ensuring that the housing ladder for young people remains intact.
Lee Ok-keun, chairman of the Financial Services Commission, stated during a report to the National Assembly's Political Affairs Committee on July 29, "High levels of household debt and increased liquidity in the market still pose risks," and added, "We will continue our efforts to protect low-income individuals and genuine borrowers within a consistent household debt management framework."
The ratio of household debt to gross domestic product (GDP) has decreased from 98.7% in 2021 to 85.3% in the first quarter of this year. The growth rate of mortgage loans across the financial sector has also been managed, decreasing from 2.8% in the first half of last year to 2.1% in the second half, and 2.2% in the first half of this year.
Chairman Lee assessed that, following the June 27 measures, the growth rate of mortgage loans has slowed, limiting the impact of household debt on the real estate market compared to the past. However, total household loans across the financial sector increased by 9.3 trillion won in May and 8.3 trillion won in June, largely due to an increase in other loans, particularly revolving credit lines.
The Financial Supervisory Service is also collaborating with the Financial Services Commission to ensure that genuine borrowers do not suffer during the management of household debt. Lee Chan-jin, head of the Financial Supervisory Service, stated, "We will consider concerns about the loan cliff, loan refugees, and the potential damage to the housing ladder for young people," and added, "We will also check the use of business loans to prevent circumvention of lending regulations."
During the committee meeting, concerns were raised that household debt regulations are limiting asset formation opportunities for young people. Representative Jo Jeong-hoon of the People Power Party criticized Chairman Lee by referencing his past home purchase, stating, "The older generation is increasing their assets through real estate while blocking the path for younger generations."
In response, Chairman Lee remarked, "If finance flows excessively into real estate, it will stimulate housing prices and create side effects that distance the housing ladder. It is essential to support those who are genuinely trying to reside in their homes."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.