Korea Housing Finance Corporation (HF) is set to begin talks with banks to expand the handling of mortgage credit guarantees (MCG). MCG is a product that supplements, with a guarantee, the deduction for small lease deposits that is subtracted from the collateral value when banks calculate the loan limit for a mortgage loan. Without MCG, there is an effect of reducing the loan limit.
According to the financial sector on the 31st, Korea Housing Finance Corporation (HF) plans to hold meetings with major banks within the year to discuss expanding MCG handling. Within the scope of maintaining the household debt management stance, they plan to discuss to what extent banks can increase MCG.
Most banks, including KB Kookmin, Shinhan, and NH Nonghyup Bank, have successively suspended handling MCG and mortgage credit insurance (MCI) since May. Commercial banks have typically handled MCG and MCI together when providing mortgage loans, but as household loan regulations tightened, they restricted new enrollments to reduce loan amounts.
MCI is a product for which Seoul Guarantee Insurance Company provides the guarantee, and MCG is guaranteed by Korea Housing Finance Corporation. If borrowers cannot enroll in MCI and MCG, the loan limit decreases by up to 55 million won in Seoul and by about 48 million won in overcrowding control areas in the capital region.
The Financial Services Commission raised this year's household loan total growth rate target on the 13th from 1.5% to around 3%. After strengthening household liability management in April led to continued pushback from borrowers, it increased lending capacity to expand dwellings supply and ease financing burdens on young people and end users. In response, Korea Housing Finance Corporation (HF) also appears to be preparing talks with banks to expand mortgage loan limits.
The Financial Services Commission (FSC) plans to allocate the newly increased household loan total targets across each financial sector. After that, the scope of banks' handling of MCI and MCG is expected to take shape.