Banks that have exceeded household loan limits are now turning their attention to group loans. While they are reducing the limits on mortgage loans, competition is intensifying for balance loans based on apartment collateral.
According to the financial sector on the 23rd, Hana Bank has suspended the acceptance of new mortgage and jeonse loans through loan solicitors for the November execution period.
Other banks are also continuing to reduce household loans. KB Kookmin Bank lowered the limit for mortgage loans for home purchases to 300 million won across all regions on July 10. Shinhan Bank reduced the limit for new credit loans to a maximum of 100 million won based on annual income and lowered the limit for overdraft accounts to 50 million won on August 5.
The banks are unable to ease their grip on household loan management as they have already surpassed their annual management targets. As of August 20, the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) reported a household loan balance of 651.151 trillion won, an increase of over 6.1 trillion won compared to the end of last year. This figure exceeds the existing annual increase target of 4.3363 trillion won.
Despite regulations on credit loans, related indicators have decreased for the first time in four months. The balance of credit loans at the five major banks was 109.7462 trillion won as of August 20, a decrease of 7.1 billion won from the end of the previous month.
In contrast, group loan operations are showing an active stance. Financial authorities have decided to manage group loans, including moving expenses, interim payments, and balance loans, separately from the total amount targets for each financial institution.
As banks competitively shift their focus to group loans, the related balance has increased by over 700 billion won in a month. The balance of group loans at the five major banks was 148.9823 trillion won as of August 20, an increase of 739.8 billion won from the end of July. This marks an increase of nearly 90 billion won compared to the growth in July. For instance, the five major banks have raised the balance loan limit for the large apartment complex 'The D.H. Bangbae' in Seocho-gu, Seoul, from 100 billion won to between 200 billion and 400 billion won.
As financial authorities are expected to allocate total amounts for youth and low-credit loans and group loans soon, competition among banks for additional lending capacity is likely to intensify.
In particular, there is a possibility of fierce interest rate competition centered on group loans. KB Kookmin, Shinhan, Woori, and NH Nonghyup banks are offering rates around 4.68% by lowering their added interest rates. Hana Bank is applying a rate of 4.766% based on financial bonds, which can be reduced to as low as 4.566% for families with multiple children.
Regarding loans for youth and low-credit borrowers, banks are expected to focus on selecting borrowers with low delinquency risks. However, while financial authorities have instructed banks to actively supply group loans, they have also indicated that monitoring will be strengthened, suggesting that excessive competition may be limited. A financial sector official stated, 'Balance loans are secure as they are collateralized, which can be highly profitable for banks,' adding, 'They will likely compete aggressively for loans related to remaining apartments this year.'
* This article has been translated by AI.
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