Kim Jong-hwa, a Commissioner of the Bank of Korea, expressed concerns on the 25th that household loans could rise again due to the recent increase in dwellings prices, emphasizing the need for policy coordination between the government and the Bank of Korea.

Commissioner Kim disclosed this through the '2025 Financial Stability Report message from the chair' released that day.

Newly appointed Monetary Policy Committee member Kim Jong-hwa delivers an inauguration speech at the appointment ceremony held at the Bank of Korea in Jung-gu, Seoul, on April 25. /Courtesy of News1

Commissioner Kim assessed, 'Despite ongoing domestic and external uncertainties that expand volatility in financial and foreign exchange markets, Korea's financial system generally showed stability, supported by financial institutions and external sectors maintaining a good level of shock absorption capability.'

He added, 'However, there are concerns that the soundness of financial institutions may deteriorate, particularly among certain regions and non-bank sectors, due to high domestic and external uncertainties and economic slowdown.' He also noted, 'Additionally, caution is needed as the rise in expectations for dwellings prices, especially in some areas of the metropolitan region, could potentially expand risks related to the housing market and household loans.'

The Commissioner further stated, 'It is particularly important to maintain policy coordination with the government to prevent the expanding trend of dwellings price increases in certain regions from leading to a surge in household loans and overheating in the real estate market under the trend of interest rate cuts.' He emphasized, 'The Bank of Korea will strive to ensure that the financial system remains stable through cooperation not only with the government but also with financial institutions.'

Additionally, he stressed, 'In the medium to long term, there is a need to continue structural reform efforts aimed at stabilizing the downward trend of household debt leverage and alleviating the concentration of credit in the institutional sector related to the real estate sector.' He added, 'Given the increasing impact of housing policy finance on financial stability, it is desirable to enhance the operational methods of the system in a direction that emphasizes harmony among policy goals such as improving housing welfare and financial stability.'

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