The financial authorities will hold a household debt inspection meeting to review the status of the 6·27 loan regulations and discuss improvements. With the recent increase in household loans and rising housing prices in Seoul this month, there are prospects that additional loan regulations may be announced soon.
According to the financial sector on the 11th, the Financial Services Commission and the Financial Supervisory Service will hold a household debt inspection meeting on the 13th. Since the announcement of the 6·27 loan regulations, the financial authorities have held almost weekly meetings to monitor household debt trends.
The rate of increase in household loans has been accelerating this month. As of July 7, the outstanding balance of household loans from the five major banks—KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup—was 760.8845 trillion won, an increase of 1.9111 trillion won compared to the end of July (758.9734 trillion won). In just one week, household loans increased by nearly 2 trillion won, and if this trend continues, the increase in household loans this month might approach the record high of last August (9.6259 trillion won).
However, the financial authorities view the increase in household loans as temporary. While there has been a surge in credit loans due to factors like public offering subscriptions, they noted that the increase in housing mortgage loans is slowing down faster than expected. A financial authorities official said, "The housing mortgage loans applied for in May and June, before the announcement of regulations, are being executed with a delay of approximately two months, so it is inevitable that the increase trend continues until mid-month. However, recently, the number of new housing mortgage applications and the amount applied for have also plummeted."
However, it is too early to feel relieved. The surge in credit loans cannot be disregarded as a potential 'balloon effect' of the housing mortgage regulations, and housing prices in Seoul are beginning to rise again. According to statistics from the Korea Real Estate Board, the price of apartments in Seoul rose by 0.14% in the first week of August, expanding the increase from the previous week (0.12%) by 0.02 percentage points. The rise had been decreasing for five consecutive weeks before trending upward again after six weeks.
As a result, projections suggest that additional loan regulations may be announced. Strengthening the loan-to-value ratio (LTV) in regulated areas is mentioned as a likely additional regulation. Currently, an LTV of 50% applies in regulated areas such as the three districts of Gangnam (Gangnam, Seocho, Songpa) and Yongsan. In other areas, it is 70%. If the LTV were to drop below 50%, the loan limit for high-priced housing exceeding 1.2 billion won in regulated areas could be reduced to below 600 million won.
There are also discussions about applying the debt service ratio (DSR) for jeonse loans and policy finance products. A financial authorities official stated, "The trend of household loans after the end of this month will be a gauge for assessing the effectiveness of the 6·27 loan regulations," adding, "We are always prepared for additional loan regulations and will use them without delay when the time comes."