Borrowers with an annual income of 60 million won, the limit on housing loans in the metropolitan area will be reduced by 55 million won starting today
▲ ⓒNew Daily
Starting on the 1st, the limit for housing mortgage loans (hereinafter referred to as housing loans) in the metropolitan area that can be received from banks will be reduced by up to 55 million won.
As the financial authorities implemented the second-stage stress total debt service ratio (DSR) that further strengthened lending regulations centered on the metropolitan area, the loan limit was reduced as the additional interest rate on the housing loan of banks in the metropolitan area became higher than that in the non-metropolitan area.
The financial authorities plan to check whether the reduction in bank lending limits is having a balloon effect in the secondary financial sector.
According to a simulation by financial authorities, if a borrower with an annual income of 60 million won receives a housing loan in the metropolitan area from a bank with a 30-year floating rate (assuming a loan interest rate of 4.0%) from the 1st, the limit will be reduced by about 55 million won to 364 million won due to the application of the Stage 2 Stress DSR.
The limit before the introduction of the Stage 2 Stress DSR was 400 million won.
In the case of non-metropolitan areas, it is estimated that the limit will be reduced by about 35 million won, as the maximum loan amount for housing loans is 383 million won.
The limit reduction rate is estimated to be 4% in the metropolitan area and 3% in the non-metropolitan area when receiving a mortgage with a fixed interest rate (5 years) for a periodic type. In addition, it is analyzed that the limit for the mixed type (5 years fixed + floating interest rate) will be reduced by 8% and 5%, respectively, and the floating interest rate will be reduced by 13% and 8%.
Stress DSR is a system that calculates the loan limit by imposing a certain level of additional interest rate (stress interest rate) when calculating DSR to prepare for the possibility that borrowers using variable rate loans, etc. may have an increased burden of principal and interest repayment due to interest rate increases during the loan period.
When the first stage of stress DSR regulations were implemented in February of this year, a stress interest rate of 0.38%p was added to the bank housing loan, but from that day on, a surcharge of 0.75%p will be applied to bank housing loans, credit loans, and secondary financial sector housing loans, and a surcharge of 1.2%p will be applied to bank housing loans in the metropolitan area.
Banks can provide loans within the limit of 40% for DSR, which is the amount of principal and interest that the borrower must repay in a year divided by annual income, and secondary financial institutions can provide loans within the limit of 50%.
The reason the government is tightening the lending limit by applying a higher stress interest rate to housing loans in the metropolitan area is because the rapid increase in household loans continues unabated as real estate prices rise, especially in the metropolitan area.
According to the financial sector, household loans from banks increased by 8 trillion won as of the 29th, the largest increase in 3 years and 1 month since 9.6 trillion won in July 2021.
Financial authorities analyzed that this was due to the last-minute demand before the strengthening of lending regulations due to the implementation of DSR and the surge in credit loans for low-price purchases during the stock price plunge early this month.
Financial authorities also plan to keep a close eye on the balloon effect resulting from the implementation of the second-stage stress DSR.
A financial authority official said, “Starting this week, we plan to check the increase and decrease in household loans from mutual finance institutions such as Nonghyup and Shinhyup, Saemaul Geumgo, and insurance companies, as well as the number of loan applications, which is a leading indicator, on a daily basis.”
The government plans to move toward stronger regulations, such as expanding the scope of DSR application to include jeonse loans and policy mortgages after October, if the rapid increase in household debt is not curbed even after the implementation of new lending regulations.