Office worker A took a day off recently and spent the entire day going from bank to bank to get a move-in balance loan for a home the person will move into early next year. But every bank visited said a loan was not possible, so, with no other choice, the person is even looking into high-interest lend companies.
According to the financial sector on the 31st, the financial authorities set this year's target for the increase in household loans at 5.9493 trillion won, but household loans at the five major banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) grew by about 8 trillion won through the end of last month. Because of this, major banks halted new lending from midmonth.
Mortgage loans at the five major banks have been on a decline since last month. As of the end of last month, the mortgage loan balance at the five major banks was 611.2857 trillion won, up 639.6 billion won in a month. That is the smallest increase in about 20 months.
As major commercial banks suspended mortgage loans, people who need loans for moves or new-unit subscriptions face urgent pressure. Those who did take out loans must pay higher rates, increasing their interest burden. Woori Bank raised the six-month variable mortgage rate two weeks ago to 4.08%–5.28% from 3.84%–5.04%. KB Kookmin Bank also increased the rate on the same product to 4.16%–5.55% from 3.91%–5.31%.
According to the Korea Financial Investment Association, the yield on five-year financial bonds (unsecured, AAA), which serve as the benchmark for five-year fixed mortgage rates, topped 3.6% in midmonth and now hovers around 3.5%. It is the first time in a year and six months that the five-year financial bond yield has risen to 3.6%.
Borrowers are waiting for lending operations to resume early next year, but the tighter loan management stance is expected to continue next year as well. The Financial Services Commission plans to hold a household debt review meeting around Jan. 13 and ask banks for strict management.
A banking sector official said, "The government has shifted to a system of managing household loans year-round. Even when the year changes, active sales or rate-cut competition is unlikely to break out."