The banking sector is concerned about a surge in 'last-minute demand' ahead of the implementation of the total debt service ratio (DSR) stress test on July 1. Although the last-minute demand was somewhat dispersed due to the postponement of the implementation of stage 2 of the stress DSR last year, household liabilities increased by 10 trillion won in the month prior to the implementation of the system.
According to the financial sector on the 21st, banks are conducting work to overhaul their computer systems for the implementation of stage 3 of the stress DSR. In particular, they have begun to enhance their responses at service counters and improve systems in preparation for the 'last-minute phenomenon' where loan demand surges before the regulation takes effect.
A representative from a commercial bank noted, "Since the confirmation of the implementation of stage 3 of the stress DSR in July, inquiries about mortgage loans have increased," adding that they are strengthening training on customer responses regarding regulations for their employees.
The financial authorities plan to thoroughly monitor whether financial institutions comply with their monthly and quarterly management targets, as they are concerned about the increase in household loans before the regulation takes effect.
In the metropolitan area, when stage 3 of the stress DSR is implemented, the stress rate will rise by 1.5 percentage points. The financial authorities expect that the mortgage loan limit for metropolitan residents, based on an annual salary of 100 million won, will decrease by 10 million to 30 million won compared to stage 2. Starting from stage 3, the stress rate will be applied to all household loans. The credit loan limit is also expected to decrease by about 1 million to 4 million won depending on income levels.
Last year, there was a significant influx of last-minute demand when stage 2 of the stress DSR was implemented. In September last year, the total household loans across all financial sectors increased by 9.7 trillion won. This was about twice the amount compared to the previous month (5.2 trillion won). Among these, mortgage loans increased by 8.5 trillion won.
In September, when stage 2 was implemented, mortgage loans increased by 6.9 trillion won. Some of the loans applied for in August were disbursed in September, delaying the effects of the regulatory tightening.
Banks have already reported that the last-minute demand due to the announced regulatory tightening has begun. The household loans of the five major commercial banks, including Kookmin, Shinhan, Hana, Woori, and NongHyup, increased by 2.8879 trillion won from the beginning of this month until the 15th. This surpasses the total increase for the entire month of April (2.3 trillion won) in just 15 days. If this trend continues, it is estimated that household loans from banks alone will increase by about 6 trillion won this month.
If loan demand continues to surge before the implementation of stage 3, banks plan to adjust the pace by raising interest rates or halting some loans.
A representative from a commercial bank said, "In practice, we are subject to total loan quantity regulation, so if there is a sudden surge in demand for loans before July, we may hardly be able to conduct loan operations in the second half of the year," adding that they will focus on adjusting loan speeds as much as possible during June.