SEOUL, Sept. 15 (Yonhap) — Finance Minister Hong Nam-ki said Wednesday that the government will explore additional measures to reduce household debt, including stricter lending rules for non-bank institutions. , if necessary.
Hong said the country would seek to minimize the impact of loan regulations on people trying to take out loans to find rental homes.
“The government plans to closely monitor household loan growth until it slows down,” Hong said at a government meeting on the real estate market.
The Financial Services Commission (FSC), the financial regulator, is looking at ways to further tighten rules on home-secured loans in a bid to slow the growth of household debt.
Since July, the FSC has applied stricter lending calculations for mortgages, called the debt service ratio (DSR). The DSR measures the amount a borrower must pay in principal and interest as a proportion of their annual income.
House prices in South Korea showed no signs of letting up as more people took out bank loans to buy homes in anticipation of rising prices despite a series of government restrictions.
Additional lending regulations are being reviewed as people have flocked to non-bank institutions to borrow money to avoid stricter rules on bank lending.
In 2020, household debt increased by 7.9% year-on-year. The regulator aims to reduce the annual increase to less than 6% this year and less than 5% next year.
High household debt has been cited as the main bane of the South Korean economy.
Loans to households from banks and nonbanks rose 8.5 trillion won ($7.2 billion) in August, compared with a monthly gain of 15.3 trillion won in July, according to the Financial Supervisory Service. (FSS).
Later this month, Hong plans to chair a four-way meeting to discuss ways to reduce household debt with Bank of Korea Governor Lee Ju-yeol, new FSC chief Koh Seung-beom and Jeong Eun. -bo, the new leader of the FSS. .