As end-users clamored for the tightening of high-intensity household loans, the government and financial authorities decided to apply an exception to the total amount regulation on jeonse loans by the end of the year. In order to prevent end-users from being harmed, the key is to tolerate Jeonse and group loans even if the balance of household loans this year increases significantly more than the target. As a result, the ‘domino-style jeonse and group loan suspension’, which had been a major concern in the beginning, is expected to come to an end.
On October 14, Koh Seung-beom, chairman of the Financial Services Commission, said, “We will protect end-users so that there are no cases of cessation of jeonse and group loans.” He said, “We will tolerate even if the growth rate of household loan balance exceeds the management target (about 6%) due to the increase in jeonse loans in the fourth quarter of this year.” He also added, “There will be no major problems with the balance loan being supplied by the end of the year for group loans.”
President Moon Jae-in also strengthened the measures taken by the financial authorities to protect end-users. Immediately after Chairman Koh’s remarks on the same day, President Moon ordered the financial authorities to carefully manage the supply of jeonse loans and remaining loans to banks and branches without any setbacks.
The reason the financial authorities decided to make an exception for the cheonsei loan from the total household debt regulation on the same day was because of the growing criticism that the end-users with good intentions would be harmed. End-users complained that it was difficult to even pay the mid-payment, balance, or rent for a house due to blockade of loans, and it rained on the bulletin board of the Blue House petition.
After the FSC decided to subtract from the ‘regulation of the total amount of cheonsei loans’ in the fourth quarter, the financial authorities decided to make an exception to the regulation on the total amount of cheonsei loans. Accordingly, NH Nonghyup Bank, which temporarily suspended new household real estate collateral and jeonse loans since August 24, resumed new handling of jeonse loans from October 18, and Shinhan Bank also normalized jeonse loans through loan solicitors on the same day. did. Since October, Shinhan Bank has been limiting the amount of jeonse loans through solicitors to a total of 500 billion won. Woori Bank also decided to allocate an additional limit on the leasehold loan while maintaining the branch loan limit.
However, the authorities are planning to strengthen the loan review to block speculative purposes, saying that if the suspended jeonse loans are resumed, demand may suddenly surge.
Additional measures for household debt to be announced in October are expected to be the ‘assessment of repayment capacity’. Earlier, the heads of the four major economic and financial authorities held a meeting at the end of September and announced, “We will seek ways to get loans within the scope of repayment capacity while suppressing the increase in household debt as much as possible.” As for additional loan regulation scenarios based on evaluation of repayment capacity, three major scenarios are mentioned: ▲ early expansion of DSR regulation, ▲ regulation of jeonse loans, and ▲ blocking the balloon effect of the second financial sector. Although the government is in the position of making efforts so that end-users such as ordinary people do not face difficulties, experts agree that all three scenarios will have a significant ripple effect on the market.
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