Kim Byeong-hwan, the Chairperson of the Financial Services Commission, noted on the 26th regarding criticisms that 'the recent household loan regulations from the financial authorities lack consistency,' stating, 'There are unavoidable aspects for achieving policy goals,' and 'We are enduring the criticism.'
On the same day, Kim spoke at a press conference held at the Government Seoul Hall. He mentioned, 'There have been allegations that the financial authorities are going back and forth on household loan policies,' adding, 'The context of this criticism is broadly twofold. One is the criticism questioning whether it is correct for the financial authorities to point out lowering loan interest rates to the financial sector while tightening the total amount of household loans, and the other is questioning whether it is correct to tighten household loans again after the banks loosened them at the beginning of this year after tightening them at the end of last year.'
Regarding the first criticism, Kim replied, 'The target function of the financial authorities is to lower loan interest rates in accordance with interest rate cuts and to control the increase in the total amount of household loans considering macroeconomic conditions,' adding, 'The only way to achieve both goals simultaneously is through bank screening.' He asserted that banks must lower interest rates while strengthening loan screening to prevent a surge in the total amount of household loans. Kim remarked, 'Considering the necessity of managing household debt in a situation where interest rates are falling, such a combination is unavoidable.'
In response to the second criticism, Kim referred to the autonomy of banks. He emphasized that 'the policy of the financial authorities is to manage the household debt growth rate within 3.8% this year' and 'to push for the establishment of the total debt repayment ratio (DSR) without exception.' He continued, stating, 'The remaining part will be left to the banks' discretion,' adding, 'Depending on the situation, it is unavoidable for banks to tighten or loosen household loans.'
Kim also conveyed that the financial authorities cannot impose specific product restrictions. He stated, 'The government cannot issue guidelines that uniformly restrict loans for multiple homeowners or stop gap investments.' However, Kim concluded by saying, 'It is unfortunate that the current situation causes inconvenience to customers who are actually borrowing money,' adding, 'We will try to minimize any inconvenience as much as possible.'
Kim's remarks this time are an explanation for the criticism that there is inconsistency in household loan management policies. The Seoul City proclaimed the lifting of the land transaction permit zone for the Jamsamdae Cheong (Jamsil, Samsung, Daechi, and Cheongdam) in February, which raised concerns that the surge in Seoul's housing prices and transaction volume could stimulate demand for household loans. Following this, household loans across the financial sector increased by 4.3 trillion won in February, prompting the Financial Services Commission to order banks to find 'operational finesse' to curb the growth of household loans. Major banks began to loosen loan restrictions at the beginning of the year, but after the order for operational finesse, they started to restrict certain products, such as housing mortgage loans for multiple homeowners, again. This led to criticisms that the financial authorities' household loan management policies easily change, causing confusion among consumers.