Banks appear poised to ease household loans ahead of the new year. But financial authorities are expected to soon summon banks and urge them to refrain from aggressive lending sales. The aim is to break the vicious cycle of an early-year lending surge and a year-end "loan shutdown" that has repeated every year.
According to the financial sector and financial authorities on the 28th, the Financial Services Commission (FSC) is said to be planning to hold a household debt review meeting around Jan. 13 and call for thorough management of early-year household loans.
Financial authorities have curbed the total volume of loans through monthly and quarterly management, but they are expected to focus more on the monthly management system in the new year.
With the new year, financial authorities are concerned that banks, freed from pressure to manage the total volume of household loans, may sharply lower lending thresholds.
This is because the practice has been repeated of aggressively expanding loans when the early-year total target is reset, overshooting the target, and then effectively closing lending windows at year-end under the pretext of limit management.
As a result, genuine demand borrowers repeatedly experience a year-end "loan cold snap" of low limits and high rates.
In fact, major commercial banks in Jan. last year eased household loans one after another that they had applied at year-end, such as raising or abolishing the loan limit for lifestyle stabilization funds under mortgage loans and resuming loans through loan brokers.
This year as well, banks plan to ease regulations on household loans, such as again accepting new mortgage loan applications through loan brokers. However, with financial authorities applying pressure, they are expected to adjust the pace.