In the new year of 2025, the threshold for lending will be lowered. As the limits for household loans are reset with the change of the year, banks are immediately easing loan regulations. Most regulations, except for those on multiple homeowners regarding housing collateral loans, have returned to their original state. However, loan limits are expected to decrease with the introduction of the 3rd phase of the total debt service ratio (DSR) stress test in July. Consequently, 'last-minute demand' is expected to increase in the first half (January-June).
According to the financial sector on the 2nd, KB Kookmin Bank, Shinhan Bank, and Woori Bank are relaxing the limits on housing collateral loans for living stability starting today. Shinhan and Woori banks are raising the limit from 100 million won to 200 million won, while Kookmin Bank has decided not to impose a limit at all. Hana Bank and NH Nonghyup Bank are limiting the housing collateral loan for living stability purposes to 100 million won only for multiple homeowners.
Additionally, Kookmin, Shinhan, Hana, and Woori banks have decided to lift the suspension of mortgage insurance (MCI, MCG) subscriptions for housing collateral loans. By subscribing to mortgage insurance, the loan limit can be increased by up to 55 million won (based on the metropolitan area). They will also accept applications for previously blocked non-face-to-face housing collateral loans, jeonse loans, and credit loans. However, Woori Bank will temporarily suspend non-face-to-face credit loans.
According to the government's principle of blocking speculative demand, regulations on housing collateral loans for multiple homeowners are expected to remain in place for the time being. Conditional jeonse loans, which were temporarily suspended to curb gap investments (purchasing homes with jeonse), are trending toward resumption. It seems that this consideration is based on complaints that some actual demanders are suffering due to restrictions on jeonse loans for newly sold dwellings.
The issue is the loan limit. When the stress test DSR 3rd phase is implemented, stress rates will be applied to loans from all financial sectors, including secondary financial institutions, resulting in reduced loan limits. The stress rate is a type of additional interest rate applied when calculating the loan limit.
For example, if a financial consumer with an annual income of 100 million won takes out a housing collateral loan under the conditions of a 30-year term, variable rate (5 years), and partitioning repayment at an interest rate of 4.5% per annum, they can currently get 574 million won in the metropolitan area and 640 million won in non-metropolitan areas. With the application of the 3rd phase, the limit reduces to 556 million won regardless of the region. This translates to a reduction of up to 50 million won in the loan limit. If the loan is taken at a fixed rate, the limit decreases by about 30 million won under the same conditions.
However, there is room for adjustment in the stress rate applied to non-metropolitan areas. When transitioning from the 2nd phase to the 3rd phase, the loan limits for financial consumers who purchased dwellings in non-metropolitan areas decrease the most. During the 2nd phase, the stress rate applicable to non-metropolitan areas was 0.75 percentage points lower than the metropolitan area (1.2 percentage points), but the 3rd phase applies a rate of 1.5 percentage points regardless of the region. Lee Bok-hyun, head of the Financial Supervisory Service, noted in a meeting with reporters on Dec. 20 of last year, 'We will ensure that consumers feel more comfortable regarding household loans for regional real estate.'