By the end of this year, it will become increasingly difficult to get loans from commercial banks.
Banks are bowing their heads in the face of continuous and strong demands from the financial authorities to strictly control the growth rate of household loans.
Some banks have stopped handling some new loan products altogether, while other banks also predicted that “if there is a concern about loan concentration, we will use measures such as adjusting interest rates at any time.”
◇ Household loans from major banks increased by 4% compared to year-end
According to the five major domestic banks on the 22nd, KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup Bank, the total balance of household loans by these banks as of the 19th was 69578.4 trillion won.
This is an increase of about 3.8% from the balance of 670,153.9 billion won at the end of last year.
At the end of last year, the financial authorities ordered commercial banks to manage the annual growth rate of household loans this year so that they do not exceed 5 to 6 percent.
With more than four months of this year remaining, with about one-third remaining, banks must maintain or reduce the rate of loan growth at the current rate in order to meet the annual growth target of 6%.
By bank, Nonghyup Bank’s household loan balance as of the 19th rose 7.3% from the end of last year, already exceeding the annual threshold of the financial authorities.
In the same period, Hana Bank’s household loan growth rate was also high at 4.2%.
Kookmin Bank and Woori Bank followed with 2.9% each and Shinhan Bank with 2.1%.
◇ Banks and authorities report monthly ‘loan management plan’
As the rate of increase in household debt has not been caught in a situation where the possibility of a base rate hike is increasing, financial authorities have been receiving reports from banks on the implementation of monthly loan management plans and transfer plans since the end of May.
An official from a commercial bank said, “All banks are reporting plan reports and feedback reports at the end of the month in the same way.”
Nonghyup Bank, whose household loan growth rate has already exceeded its target, released the last resort on the 19th, ‘suspending new household mortgage loans’ as pressure from the authorities intensified.
Woori Bank announced that it would deal with limited deposits until the end of next month as the 3Q limit on Jeonse loan, which had been dealt with on a quarterly basis, had already been exhausted.
SC First Bank, a foreign bank, also stopped handling new balance Cofix (COFIX) interest rate linked products among ‘First Home Loans’, one of the collateralized loans.
Starting from the 30th, the preferential interest rate for this loan will also be reduced by 0.2 to 0.3 percentage points for each condition.
◇ “If it is looser than other banks, lending will come… Take action at any time”
Even if it is not a measure to the extent of suspending new loans, all banks are trying to ‘constrain’ by raising interest rates or reducing the loan limit.
A bank official said, “If the inflow of loan customers increases due to the balloon effect caused by the suspension of loans by some banks, the rate of increase in household loans in the second half of the year could be higher than in the first half.”
The official said, “It is unlikely that Nonghyup Bank will stop handling new products, but the possibility of adjusting the rate of loan growth by adjusting interest rates is always open.” This could lead to a surprise increase in loan interest rates.
There is also the possibility of stopping the sale of mortgage credit insurance (MCI) and mortgage credit guarantee (MCG) loans.
MCI/MCG is insurance that is purchased at the same time as a mortgage loan. Eliminating this insurance-linked main loan product has the effect of reducing the loan limit.
Previously, Nonghyup Bank and Shinhan Bank stopped selling these loans.
Banks are gradually raising interest rates on loans by raising additional interest rates and reducing preferential rates.
The interest rate for major banks’ representative credit loan products was 2.19% a year at the lowest and 3.74% at the highest in January of this year, but as of the 19th, the lowest interest rate was 2.28% a year and the highest interest rate was 4.01% a year.
The variable interest rate for mortgage loans rose from 2.417 to 4.071% per annum at the end of January to 2.48 to 4.65% per annum on the 19th, with the upper end of the interest rate jumping by 0.6 percentage points.
An official from a commercial bank said, “If a bank has a relatively low interest rate or a loose loan standard, loan concentration is very evident.”