Financial Supervisory Service Governor Apologizes for Household Loan Confusion

Financial Supervisory Service Governor Lee Bok-hyun has made an official apology for the confusion caused by financial authorities regarding household loans. At a meeting with bank presidents, the director ordered them to respond autonomously according to the situation, and most banks announced that they would strengthen the loan screening for multiple home owners, but would allow exceptions for actual demanders.

Financial Supervisory Service Governor Lee Bok-hyun emphasized banks’ autonomous risk management in relation to household loans at a meeting attended by 18 bank presidents in Korea. The lending regulations of the supervisory authorities are only minimum standards.

For loans with high risk propensity, such as funds based on expectations of rising housing prices, we will strengthen the screening process… (Banks) should use their screening experience to demonstrate foresight…

— Lee Bok-hyun, Financial Supervisory Service Governor

He officially apologized for the confusion caused to loan applicants due to his repeated statements, especially regarding household loans.

If any of our policy operations have caused inconvenience to citizens, consumers, or those working at banks, we would like to once again apologize.

— Lee Bok-hyun, Financial Supervisory Service Governor

However, they explained that this was a result of not being familiar with the different lending standards of each bank. He also expressed his position that autonomous lending practices by banks should be established in the future.

In response, most banks have announced that they will strengthen their screening of loans that appear to be speculative, such as those for multiple homeowners who own two or more homes. They have decided to strictly review loans that can be used for so-called ‘gap investment’, such as mortgage loans or credit loans for the purpose of purchasing a home.

Shinhan Bank has decided to allow mortgage loans for new homes only to ‘non-homeowners’. KB Kookmin Bank has also decided not to provide mortgage loans to single-home buyers when they purchase a new home in the metropolitan area. However, both banks have added a condition that they will make an exception for actual buyers who are sure to sell their existing homes.

Woori Bank has also decided to treat marriage, job relocation, etc. as exceptions to the household loan restriction. Last month, household loans increased by 9.5 trillion won in one month, recording the largest increase since July 2021.

This is Kim Se-young of MBC News.