As mutual finance institutions have been successively reducing household loans recently, the Korean Federation of Community Credit Cooperatives (KFCC) has also decided to halt new mortgage loan issuances for nonmembers.
According to the financial industry on the 10th, the Korean Federation of Community Credit Cooperatives (KFCC) will soon suspend new mortgage loan issuances for nonmembers. It is also said to be ending preferential interest rates on mortgage loans for both members and nonmembers. Previously, KFCC managers provided preferential rates within their approval authority. This measure is expected to take effect as early as this month.
The Korean Federation of Community Credit Cooperatives (KFCC) already halted mid-payment, relocation expense, and balance payment loans via group lending as of Feb. 19. For balance payment loans, it blocked not only group loans but also individual loan methods.
Credit unions also banned new screenings for group lending and household loans through recruiting corporations and agents, in line with the government's push to tighten household debt management. In addition, cooperatives that exceeded the household loans growth rate cap were barred from providing loans to nonmembers. Recently, NongHyup sent an official letter instructing agricultural and livestock cooperatives whose household loan growth rate this year exceeded 1% year over year to suspend new household loans for nonmembers and associate members.
According to the March household loan trends released by the financial authorities on the 8th, overall household loans across the financial sector increased by 3.5 trillion won last month, of which mutual finance institutions accounted for 2.7 trillion won.
This is because the disbursements of loans approved before measures to halt new loan issuances by the Korean Federation of Community Credit Cooperatives (KFCC) and NongHyup were implemented have been reflected sequentially. As lending by mutual finance institutions is now broadly restricted, the scale of household loans is expected to decline over time with a lag.