Industrial Bank of Korea (IBK)(024110) New originations of variable-rate mortgage loan (home-backed loans) at branches nationwide are being suspended indefinitely. The move aligns with the government's hard-line stance to curb household loans.
According to the financial sector on the 22nd, Industrial Bank of Korea (IBK) branches nationwide halted new supply of variable-rate home-backed loans starting the day before. The timing for resuming new supply has not been set. However, to prevent confusion among borrowers, applications and consultations for new variable-rate home-backed loans that were underway through the 20th of this month will proceed until the 30th of this month.
This measure applies only to new supply of variable-rate home-backed loans conducted face to face at branches. Because the share of non-face-to-face originations online is very small—less than 3% of the total—supply will be maintained. For a while, branches will offer only fixed-rate home-backed loans.
As of the 15th, the increase in household loans at the five major banks was 468 billion won, already exceeding the annual target of 433 billion won. In response, the financial authorities have said they will maintain a strong stance to curb household loans in the second half.
Major banks are raising the bar for lending. KB Kookmin Bank cut the limit for home-backed loans from 600 million won to 300 million won early this month, and Woori Bank reduced the monthly cap per branch for home-backed loans from 3 billion won to 1 billion won. Shinhan Bank, in addition to indefinitely suspending new subscriptions to mortgage credit insurance (MCI) and mortgage credit guarantee (MCG), decided not to accept any home-backed loan applications this month.