With additional household loan limits allocated to banks, lending restrictions are expected to ease somewhat. However, due to rising benchmark interest rates, mortgage and credit loan rates are projected to approach 7-8%, which may not significantly reduce the interest burden on borrowers.
According to the financial sector on August 28, financial authorities notified banks this week of the additional household loan limits. It is reported that no separate limit was set for balance loans, allowing banks to monitor and manage them autonomously.
In recent months, banks have implemented various restrictions to meet household loan limits. KB Kookmin Bank reduced the limit for home purchase loans from 600 million won to 300 million won starting July 10. Shinhan Bank has restricted participation in mortgage credit insurance (MCI) and mortgage credit guarantees (MCG). Hana Bank has suspended new home loans and jeonse loan applications through loan brokers for November disbursements. Woori Bank has also limited MCI and MCG participation and capped housing-related loan processing at 1 billion won per branch per month.
With the allocation of additional limits, attention is focused on whether banks will relax these restrictions. NH Nonghyup Bank resumed offering variable-rate home loans on August 20, but other major banks have maintained existing restrictions.
The banking sector plans to gradually increase loans, focusing on youth and low-income individuals, rather than lifting all restrictions at once. A financial sector official stated, "As the government has called for an expansion of loans for youth and low-credit borrowers, we will start by increasing related loans."
There is also interest in whether internet banks will ease their lending restrictions. KakaoBank and Toss Bank have reduced the limits on overdraft accounts, while K Bank has decided to suspend new overdraft account sales until next month. Internet banks have a daily loan limit, making it nearly impossible to open an overdraft account without an 'open run.'
However, with the allocation of additional household loan capacity, internet banks may also expand their limits again. A financial sector official noted, "Since it has not been long since we received the additional limits, we will monitor the market situation and gradually ease lending."
The government plans to increase next year's youth-related budget by more than 15 trillion won compared to this year, allocating 43.3 trillion won. This will expand government benefits for first-born children in designated local areas from birth until the age of 34 to a maximum of 195.82 million won.
On August 28, the government held the 'Youth Budget Unboxing 2027' event at the Blue House, chaired by President Lee Jae-myung, where it announced a comprehensive investment strategy for youth development.
The financial investment for youth-related initiatives will rise from 28.2 trillion won this year to 43.3 trillion won next year, an increase of 15.1 trillion won (53.5%). The support scope, previously focused on job creation, will now expand to include birth, childcare, education, employment, asset formation, housing, and marriage.
According to government estimates, the maximum benefits an individual can receive will be 140.57 million won by age 18 and 195.82 million won by age 34. This assumes a first-born child is born in a designated local area in 2027, with parents earning 100% of the median income.
A new 'Our Child Independence Fund' will be established, allowing the government and parents to jointly save and invest from birth to age 18, with a payout of 60 million to 100 million won at maturity based on contributions and investment returns.
For children from households earning less than 50% of the median income, the government will provide 1.2 million won annually, regardless of parental contributions. For households earning between 50-100% of the median income, if parents contribute 500,000 won, the government will match it with 1 million won. For households earning between 100-150% of the median income, if parents contribute 1 million won, the government will also match it with 1 million won.
Child allowances, parental benefits, and first meeting vouchers will be integrated and restructured. Starting July 2027, child support payments of 10 million to 20 million won will be distributed in four installments based on birth order and residence area.
A basic child allowance will also be introduced at the same time, with support amounts of up to 600,000 won per month for children aged 0-1 and up to 300,000 won per month for children aged 2-12. Pregnant women will receive a monthly package of eco-friendly agricultural products worth 40,000 won for 12 months.
Regardless of income, couples who complete their marriage registration will receive a one-time marriage support payment of 1 million won. If either spouse meets the general income criteria, they will be able to access policy loans for home purchases or jeonse funds, reducing disadvantages based on combined household income.
Kevin Kashkari, Chair of the U.S. Federal Reserve, will deliver his inaugural keynote address at the Jackson Hole Economic Policy Symposium. With inflation significantly exceeding the Fed's target and long-term Treasury yields soaring, there is keen interest in the messages Kashkari will convey regarding future monetary policy.
According to reports from The Hill and others on August 27, Kashkari will speak at the annual economic policy symposium in Jackson Hole, Wyoming, at 10 a.m. local time (11 p.m. Korean time) on August 28. This will be his first appearance at Jackson Hole since taking office as Fed Chair at the end of May.
The Personal Consumption Expenditures (PCE) price index for July, released on August 26, rose 3.7% year-on-year, surpassing market expectations of 3.6%. The core PCE inflation rate remained steady at 3.3%, indicating that while inflation is not accelerating sharply, progress toward the Fed's 2% target is also not evident.
Meanwhile, economic indicators are showing signs of slowing. The U.S. non-farm payrolls decreased by 23,000 in July, and the GDP growth rate for the second quarter was only 1.5%. With persistent high inflation and weakening employment and growth, the Fed's policy decisions have become increasingly complex.
The surge in long-term Treasury yields and the subsequent actions by the U.S. Treasury are also complicating Kashkari's calculations. The yield on 30-year Treasury bonds recently exceeded 5.3%, reaching its highest level in 19 years since 2007.
U.S. Treasury Secretary Scott Vessen announced plans to increase the size of long-term Treasury buybacks from a maximum of $2 billion (approximately 27.5 trillion won) to over $4 billion (approximately 55 trillion won) per session. While the Treasury cited market liquidity support as the purpose, some interpreted it as a measure to curb the surge in long-term yields.
This contrasts with Kashkari's view that high long-term yields can tighten financial conditions. Rising long-term yields increase mortgage and corporate financing costs, potentially dampening consumption and investment, which could create a tightening effect even without further rate hikes from the Fed.
However, the market does not expect Kashkari to provide a specific interest rate path in this speech. Since taking office, he has reduced external communication from the Fed and indicated a desire to avoid pre-announcing future policy moves.
The death toll from the massive flooding near the Nepal-Tibet border has risen to 552. The total number of dead and missing has surpassed 2,000.
As of 3 p.m. local time on August 28, Nepalese police reported that 547 bodies had been recovered. This marks an increase of nearly 80 from the 469 reported earlier that day, and is also higher than the 538 reported by the Nepal National Disaster Risk Reduction and Management Authority. Additionally, a total of 977 individuals, including 517 foreigners, are currently missing in Nepal.
In Tibet, China, five people have died and 558 are missing due to a landslide that occurred on August 26, according to China Central Television (CCTV). Thus, the combined death toll from the landslide and flooding in both Nepal and China has reached 552, with 1,535 individuals missing, bringing the total of dead and missing to 2,087.
Both Nepal and China are making concerted efforts in rescue operations, but significant challenges remain due to substantial road damage in disaster areas and the risk of secondary flooding from ongoing rainfall. As search and rescue operations continue, the scale of the disaster is expected to increase.
Nepalese authorities have reported difficulties in identifying and recovering bodies as many have been swept downstream by the river. The Chinese embassy in Nepal has warned that the water level of a lake formed by a blocked river due to the landslide is rising, posing additional flood risks, stating that search and rescue operations have entered a "critical phase."
* This article has been translated by AI.
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