The government has reclassified the three districts of Gangnam (Gangnam, Seocho, Songpa) and all of Yongsan as land transaction permission zones, leading to an increase in the threshold for bank loans. As banks rush to tighten loans, confusion is arising in securing funds for actual demanders.
According to the financial sector on the 21st, Woori Bank decided to restrict new loans for the purpose of purchasing dwellings in speculative areas (the three districts of Gangnam and Yongsan) starting from the 28th. In these regions, only those without dwellings can take out new mortgage loans.
The previous day, Hana Bank announced that it would cease new transactions of 'mortgage loans for the purpose of purchasing dwellings' and 'conditional Jeonse funds' in Seoul starting from the 27th. For those who own more than one dwelling, new mortgage lending for purchasing dwellings in Seoul will be halted. NH Nonghyup Bank was the first to announce the suspension of conditional Jeonse funding exclusively in Seoul, and SC First Bank also decided to stop mortgage loans for the purpose of stabilizing the lives of multiple homeowners from the 26th. Other banks are reportedly reviewing restrictions on mortgage loans for multiple homeowners.
The banks' rush to raise loan thresholds is closely related to the reclassification of land transaction permission zones. After the removal of land transaction permission zones, the increase in house prices centered on the three districts of Gangnam has extended to nearby areas, leading to an increase in mortgage loan balances. As of the end of last month, the mortgage loan balance of the five major banks was 583.36 trillion won, which is an increase of 3.38 trillion won compared to the previous month.
Financial authorities noted that 'self-regulation measures' are needed in the banking sector due to increased loan demand. Lee Bok-hyeon, head of the Financial Supervisory Service, warned, 'For financial institutions that exceed the household loan management target in the first quarter, I will check the reasons for the excess through meetings with the management.' Kwon Dae-young, Secretary-General of the Financial Services Commission, also stated, 'For stable management of household loans, it is necessary for the financial sector to proactively respond to market conditions.' He noted that if self-regulatory measures in the financial sector are not carried out well, additional strong loan restriction policies will be implemented.
However, the vague term 'self-regulation measures' is causing confusion on the ground. Just a few weeks ago, financial authorities said that the effect of the interest rate cut is diminishing, stating, 'When the market interest rates should reflect the cut in the base rate.' Kim Byeong-hwan, head of the Financial Services Commission, remarked, 'It’s time for banks to reflect the (interest rate cut).' Lee Bok-hyeon, head of the Financial Supervisory Service, mentioned, 'It’s time for the two interest rate cuts to be reflected in bank loan rates. The effects of interest rate cuts should be felt in the first quarter of this year.'
As the government revises its policies again, banks are also hastily attempting to make a 'strategic shift,' but there is confusion about which directions to align with. An industry official from a major bank stated, 'Just a month ago, banks were eagerly lowering additional charges and thresholds, but with the situation changing so rapidly, it is difficult to adjust household loan targets,' and added, 'It feels like the responsibility is being shifted onto the banks without providing specific guidelines.'
Actual loan demanders are similarly confused. As expectations for interest rate cuts decrease, inquiries from financial consumers looking to secure consultations before loan regulations become more stringent are pouring in. Another official from a major bank stated, 'Typically, there is a few days of lead time before loan regulations are implemented, so immediately after the planned implementation date is announced, we often receive a lot of inquiries from those who had planned to take out loans,' and added, 'Currently, there are no additional regulations under review, but depending on the positions of other banks and authorities, there may be review items that arise.'