The target for the growth rate of household loans has doubled, allowing for an annual increase of approximately 30 trillion won. However, immediate normalization of lending is unlikely. The allocation limits and criteria for each bank have yet to be determined, and a significant portion of the funds is expected to be directed toward relocation loans, which may limit the impact on actual homebuyers.
According to the financial sector on August 18, the Financial Services Commission and the Financial Supervisory Service will hold a practical meeting on August 19 to adjust the household loan quotas for financial institutions. During this meeting, they will discuss how to distribute the additional lending capacity of about 30 trillion won among financial companies.
A substantial portion of the increased capacity will be used for loans aimed at promoting housing supply, such as relocation, interim, and final payment loans. As a result, the lending difficulties for actual homebuyers related to moving and relocation are expected to ease to some extent. The authorities have decided to manage housing supply-related loans separately from the overall loan quota, increasing the incentive for financial institutions to actively handle these loans.
With the expanded quota, the lending capacity of banks for the second half of the year is also expected to increase somewhat. Based on the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup), it is anticipated that there will be a maximum of 7.5 trillion won available for mortgage loans in the remaining period. The annual increase target has risen from 4.3363 trillion won to 8.6726 trillion won, assuming that all remaining limits, after excluding the already increased 1.1175 trillion won, will be utilized for mortgage loans.
However, until the total allocation is confirmed, it will be challenging for bank branches to actively guide customers on loan limits. Each bank has different existing loan increase records and management levels, meaning the actual additional amounts they can handle will vary. Even though the financial authorities have relaxed the overall management methods, the specific lending capacities of each bank remain undetermined, suggesting that conservative lending practices are likely to continue for the time being.
The expansion of the quota does not imply a relaxation of existing lending regulations. Confusion continues regarding the detailed review criteria. While exceptions for non-resident homeowners seeking jeonse loans will be recognized in unavoidable circumstances, such as caring for parents or job relocation, the judgment on specific cases has been left to the credit review committees of individual banks.
Given the variety of actual cases and the ambiguity of certain situations, banks are compelled to exercise caution in executing loans. If similar circumstances are judged differently by financial institutions, it could lead to greater confusion among borrowers.
The financial authorities plan to share relevant information with the financial sector if companies request interpretative guidance from the Financial Services Commission on difficult cases. Rather than providing uniform guidelines, the aim is to accumulate interpretations of individual cases to refine the criteria.
The financial authorities intend to complete discussions on the adjustment of quotas for each bank by the end of this month and accelerate the normalization of lending. A representative from the financial authorities stated, "Since we have doubled the total loan quota, we believe issues such as loan runs will be resolved. We will finalize discussions this month to ensure that financing for actual needs continues smoothly."
* This article has been translated by AI.
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