Financial companies will strengthen voluntary inspections of 'business loans' to block bypass methods for the household loan regulations implemented on June 27. This is intended to prevent the purchase of dwellings using business loans. Previously, corporate loans under 500 million won and individual business loans under 100 million won could skip purpose inspections, but in the future, a certain percentage will be sampled for inspection.
The Financial Services Commission held a joint household debt inspection meeting with related agencies on the 25th. The meeting discussed the trends in household debt in July and ways to strengthen management of business loans.
The Financial Services Commission assessed that the increase in household loans in July is slowing compared to June. It also analyzed that the rising rates of apartment sale prices in major areas of Seoul are decreasing, indicating the effectiveness of strengthened household debt management measures and the implementation of the three-phase total debt service ratio (DSR).
Meeting participants agreed that voluntary management efforts by financial companies must accompany efforts to block bypass loans. Business loans should only be used for operational and facility funds, yet there has been an increase in the 'workaround' of using them for purchasing dwellings. The Financial Supervisory Service has formed an inspection team to check for unauthorized use of business loans and has begun on-site inspections.
The Financial Services Commission noted, "It is true that the increase in household loans has somewhat slowed due to this measure, but this is largely attributed to the decline in other loans, such as credit loans." They added, "We plan to closely monitor the implementation of this measure until the housing market overheating and the upward trend in mortgage loans stabilize further, and to promptly implement additional measures that are prepared, such as further tightening the loan-to-value ratio (LTV) in regulated areas and macroprudential regulations when necessary."
Meanwhile, the meeting also included the Online Investment-Linked Finance (P2P finance and investment platform) Association. The association stated, "We will manage mortgage loan limits in accordance with the purpose of this measure to ensure that online investment-linked loans are not misused as a means of regulatory bypass," and added, "We will enhance self-regulation by limiting excessive and exaggerated advertisements that can cause consumer misunderstandings."