Koh Seung-beom, chairman of the Financial Services Commission, answers questions from lawmakers during a parliamentary audit of the Financial Services Commission of the Political Affairs Committee held at the National Assembly on the 6th. By Oh Dae-geun
Koh Seung-beom, chairman of the Financial Services Commission, announced on the 6th that he would strengthen regulations on cheonsei loans and group loans, which are leading the increase in household debt this year. This is because reducing the limit on jeonse loans and group loans will inevitably hit end users, but it is more urgent to manage household debt.
Household debt management is more urgent than the impact of real demand
Chairman Koh answered, “Yes” when asked by Democratic Party lawmaker Dong-su Yoo during the audit of the Financial Services Commission held at the National Assembly on the same day, ‘If we want to achieve the annual target of 6% for the increase in household debt this year, do we need to tighten Jeonse loans and block group loans?’
“Household debt, which is growing at the fastest rate in the world, is now mostly increasing from end-user loans,” Koh added.
Chairman Koh’s remarks are interpreted to mean that the additional measures for household debt to be released in the middle of this month will also include regulations on end-user loans, such as jeonse loans and group loans. In fact, according to the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup), the balance of jeonse loans at the end of August stood at 119.96 trillion won, up 14% from the end of last year. Compared to the 4% increase in the balance of mortgage loans during the same period, the rate of increase is steep.
On the exterior wall of a commercial bank in Seool, there is a notice about the Jeonse Loan product. news
The financial sector is already tightening the limits on jeonse loans and group loans, centering on banks that are close to their annual household loan management target. From the 29th of last month, KB Kookmin Bank changed the limit of the Jeonse loan to ‘within the range of the increase in the Jeonse price (rent deposit)’. If the deposit for Jeonse increases from KRW 400 million to KRW 600 million, the Jeonse Loan is lent within the amount of the increase in the deposit of KRW 200 million.
Prepayment fee for Bogeumjari Loan cut in half
Financial institutions, like KB Kookmin Bank, anticipate that additional measures for household debt will be created in such a way that borrowers borrow only as much money as they need for leasehold loans and group loans. However, if the regulations on jeonse loans and balance loans are tightened, there is a high possibility that end users will have difficulties in raising funds. In the National Supervisory Service of the Financial Services Commission on the same day, Rep. Yu-dong Yu of People’s Strength argued that about 50,000 households whose mid-payment loans are due to maturity this year could be affected by the measures against household debt.
In this regard, President Moon Jae-in, at a staff meeting on the same day, gave instructions to related ministries, saying, “I ask that the end-users, such as jeonse loans, make efforts on the household debt policy so that they do not experience difficulties.”
Chairman Koh also said, “We are considering a plan to lower the fee rate from the current maximum of 1.2% to 0.6%, which is the maximum for policy mortgage products such as Bogeumjari Loan and Stepping Stone Loan.” However, regarding the prepayment fee for commercial bank loan products, he took a negative stance, saying, “It may pass on the burden to consumers, such as an increase in loan interest rates.”
In addition, Chairman Ko said, “We will review whether it is necessary to strengthen the standards for virtual currency listing and delisting.” This means that we will look at ways to respond to criticism that some virtual currency exchanges such as Upbit are earning fees in the process of listing and delisting virtual currencies. Regarding the recent appointment of a union-recommended director for the first time in a financial public institution by the Export-Import Bank of Korea, Koh said, “The union-recommended director system is a national task and a plan to introduce the system should be prepared at the pan-government level.”
Park Kyung-dam reporter wall@hankookilbo.com
Kwak Joo-hyun reporter zooh@hankookilbo.com
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