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Oct 15, 2025
- Authorities Unveil Measures to Bolster Management over Housing Loan Demand with Aims to Stabilize Housing Market
- The Financial Services Commission held a meeting on household debt with officials from related ministries, financial institutions, and industry groups on October 15 and announced additional measures to strengthen household loan management for implementing the governments housing market stabilization plan. At the meeting, officials assessed that household debt growth has been largely stabilized since the introduction of June 27 household debt management measures. However, in certain districts of the Seoul metropolitan area, housing prices have continued to move upward. With expectations for rate cuts and continuation of brisk housing market conditions, it is concerning that the market overheating in certain areas may spread to other regions. As such, the financial authorities viewed that it is necessary to introduce additional measures to preemptively control demand for housing loans. Key Measures Applying Different Levels of Maximum Mortgage Loans Based on House Prices (Effective from Oct. 16) The maximum amount of mortgage loan a borrower is eligible to take out for purchasing a house in the Seoul metropolitan and speculation regulated areas will be determined differentially based on the price (market value) of house. For houses with market value of up to KRW1.5 billion, the maximum amount of mortgage loan will remain the same at the current level of KRW600 million. For houses priced at more than KRW1.5 billion and up to KRW2.5 billion, the maximum amount of mortgage loan will be reduced to KRW400 million from the current level of KRW600 million. For houses valued at over KRW2.5 billion, the maximum amount of mortgage loan will be reduced to KRW200 million from the current level of KRW600 million. The differentially determined cap on mortgage loans will help to more effectively control demand for purchasing highly priced homes in the Seoul metropolitan and speculation regulated areas using mortgage loans. Tightening Stressed DSR Rule (Effective from Oct. 16) The cu
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Jun 27, 2025
- Authorities Introduce Measures to Strengthen Household Debt Management Centered on Seoul Metropolitan Area
- The Financial Services Commission held a meeting on household debt on June 27 with officials from related government ministries, industry groups, and housing loan and guarantee institutions. At the meeting, officials discussed the expanding trend of household debt triggered by mortgage loans in the Seoul metropolitan area and announced a set of measures that will help to strengthen the management of household debt especially in the Seoul metropolitan area. Household Loans In recent months, the outstanding balance of household loans has been growing since April due to the rising volume of housing transactions in the wake of temporary lifting of the land transaction permit scheme in Seoul and expectation for rate cut, and this trend has continued into June. With the rise in the volume of housing transactions in the Seoul metropolitan area,mortgage loans in this region has grown rapidly in particular. Key Measures I. Bolstering Total Management Target Considering the economys nominal GDP growth forecast and the recent trend of household debt growth, the annual target volume of household loanswhich include both financial companies own loan products and government-sponsored policy loanswill be revised down from the current level. For financial companies own loan products across all financial sectors, the total annual target volume will be reduced to 50 percent of the previous level effective from the second half of this year. For policy loans, the annual supply plan will be 25 percent less than the previously set level. II. Applying Banks Self-regulatory Measures in All Other Financial Sectors The implementation of self-regulatory household debt management measures taken up by banks on a voluntary basis will be expanded to all other financial sectors. First, in the Seoul metropolitan area and/or speculation regulated zones,current homeowners (multiple-house owners or single-house owners without the intention to sell currently owned house) will not be allowed to purchase
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Feb 10, 2023
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Jan 11, 2023
- Application for Fixed-rate Government-sponsored Mortgage Loan Available from January 30
- The FSC announced that special Bogeumjari Loan,which integrates Relief Conversion Loanand Conforming Loanwith existing Bogeumjari Loan, will be available for one year starting from January 30, 2023. For houses valued at KRW900 million or less, eligible applicants can borrow up to KRW500 million in loans, irrespective of their income, within the maximum loan-to-value (LTV) and debt-to-income (DTI) ratios. Interest rates that are lower than those for conventional mortgage loans will be applied from the end of January (4.65~4.95 percent for borrowers with house valued at KRW600 million or less and total married couples income of KRW100 million or less, 4.75~5.05 percent for borrowers with house valued in excess of KRW600 million and income surpassing KRW100 million), while adjustment will be made, when it becomes necessary, depending on the status of market interest rate, funding availability of Korea Housing Finance Corporation, etc. Background With increases in market rates gradually being reflected in interest rates on loans, interest burdens are rising rapidly on lower income households and non-speculative homebuyers. Therefore, in order to provide assistance to lower income households and non-speculative homebuyers for their home ownership and improve the qualitative structure of household debt by making them less sensitive to changes in interest rates, it is necessary to expand the availability of government-sponsored mortgage loans with fixed interest rate. Details of Special Bogeumjari Loan I. Eligibility a) (House Price) Up to KRW900 million b) (Income) Unlike the income requirement for existing Bogeumjari Loan (up to KRW70 million income threshold), there will be no income restriction applied. c) (Purpose) For purchasing a new house, replacing existing loans or returning security deposits d) (Homeownership Status) No-home owners (for purchasing a new house) and one-home owners (for replacing existing loans or returning security deposits) can apply. II. Detail
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Nov 10, 2022
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Oct 27, 2022
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Jun 17, 2022
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May 31, 2021
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Apr 29, 2021
- Government Announces Household Debt Management Plan for 2021-2023
- The government announced the household debt management plan for 2021-2023 on April 29. The plan is aimed at (i) managing the growth rate of gross household debt at stable levels for the mid- to long-term and (ii) establishing lending practices based on individual borrowers repayment capability. Background Household debt growth remained stable from 2017 to 2019 as the government was able to implement a consistent policy for household debt management. However, due to expansionary fiscal and monetary policies put in place in response to the COVID-19 pandemic, the household debt growth rate accelerated in 2020.In this year, the growth rate has slowed down somewhat since the government announced a series of policy measures to tighten mortgage regulations and boost housing supply. However, the household debt level still remains high even though credit loans which was a dominant factor in the last years household debt growth in the second half appears to have come down to a stable level. Koreas household debt has been regarded as one of the potential sources of financial risk, given its relatively high ratio against GDP and fast pace of growth compared with major economies. However, the increase in private sector debt in response to COVID-19, which is a common phenomenon, has been inevitable to some extent. In addition, due to the governments efforts at improving the structural soundness of household debt, it is unlikely that household debt turns into a systemic risk in the short-term. Against this backdrop, the government intends to preemptively manage household debt from a macroprudential perspective to prevent it from turning into potential risk factors. Regulatory adjustments at a micro level are also needed to ensure that a tightening of mortgage regulations do not curtail first-time homebuyers access to mortgages. The current regulation of loan-to-value (LTV) ratio, uniformly applied across all homebuyers, has limited opportunities for first-time homebuyers. Moreover
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Feb 28, 2020
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Dec 16, 2019
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Jul 22, 2015
- Household Debt Management Measures
- The government announced today a package of measures to manage household debt. A consultative body was formed among relevant government agencies in March this year to discuss and come up with comprehensive and preemptive measures to manage household debt in response to potential internal and external risks. The measures are focused on accelerating the improvement of household loan quality, strengthening the assessment of a borrower’s repayment ability, tightening household debt management in the non-banking sector, and strengthening banks’ ability to respond to internal or external shocks. CURRENT STATUS OF KOREA’S HOUSEHOLD DEBTThe household debt has grown fast recently after years of stabilized growth around 6%. Particularly, mortgage lending from banks has been rising fast since the second half of last year , which is attributed to multiple factors such as eased mortgage restrictions and growing demand for loans with interest rate cuts. Mortgage lending by banks which amounted to KRW 375 trillion at the end of March 2015 maintains its financial soundness with a delinquency rate of 0.39% at the end of March 2015. Banks have sufficient capability to absorb potential losses with a BIS capital adequacy ratio of 13.9% at the end of March 2015. Since the government-led KRW 32 trillion program was launched in March this year to help mortgage borrowers switch to fixed-rate and amortized loans, the shares of such mortgages continue to increase and hit 30%, initially targeted by the end of 2016, in the first half of this year. In addition, 70% of household debt is held by households in the highest income brackets – fourth and fifth quintiles. Household financial assets are more than twice household financial liabilities. Given the soundness of household debt, the possibility is limited that household debt risks would cause a systemic risk.As household debt continues to grow faster than income with a slow economic recovery, however, the government needs to take pree
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Feb 26, 2015
- Korea's Household Debt and Policy Response
- 1. CURRENT STATUS OF KOREA’S HOUSEHOLD DEBTAs of end-September 2014, outstanding household credit totaled KRW 1,060.3 trillion with household loans totaling KRW 1,002.9 trillion and merchandise credit1 KRW 57.4 trillion.2The ratio of household debt to income in Korea was 160.7 % (as of 2013), higher than 115.1% in the US(as of 2012) and 135.7% of the OECD average(as of 2012). However, Korea’s household financial assets to liabilities ratio maintained stable levels of 46%, while the ratios in Spain and other major OECD countries have been rising.The quality of household mortgage loans has been improved with proportions of fixed-rate and fully-amortized loans steadily increasing. As of end-2014, the percentage of fixed-rate and amortized loans out of banks’ household mortgage loans stood at 23.6% and 26.5% respectively, exceeding 20% initially targeted by 2014.2. POLICY MEASURES TO MANAGE HOUSEHOLD DEBT GROWTHIt is a natural phenomenon that household debt increases as economy grows. The bottom line is that it is important to boost the economy while maintaining household debt soundness.Under such awareness, the government has been managing household debt with policy measures focused on two aspects. First, secure soundness of the financial system by maintaining the pace of household debt growth at manageable levels, improving the quality of household loans and bolstering financial institutions loss-absorbing capacity. Second, ensure financial soundness of households with measures to boost household incomes and provide tailored financial services to financially-vulnerable households.The government set basic policy directions to manage household debt with「Comprehensive Measures on Household Debt」in June 2011.The policy measures were focused on maintaining the pace of household loan growth at economic growth rates; improving the quality of household loans with a larger share of fixed- rate and amortizing loans; and providing tailored support for low-income househ
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Oct 10, 2008
- Key Issues on Korean Economy
- This document is prepared with the purpose to explain the following key issues on Korean economy.- External Debt- Foreign exchange reserve- Export- Current Account Balance- Korean Banks- FX Liquidity- Policy Responses 1. External Debt □ (Size) The ratio of external debt to GDP stands at 39% as of late 2007, which is lower than that of major developed economies1) and tolerable given the size of our economy.□ (Nature) Recent growth of external debt in Korea has risen as a counterpart to hedging activities undertaken by shipbuilders and overseas investors.ㅇ This is in stark contrast to massive foreign currency short-term borrowings induced for excessive investment by Korean Chaebols that led to the 1997 financial crisis.ㅇ As of June 2008, $152 billion out of $420 billion external debt are free of repayment burden, making the size of foreign debt with repayment burden reduced to $268 billion.ㅇ In addition, 22% of the total external debt (45% of short-term external debt) belongs to local branches of foreign banks, which makes it unfitting to be regarded as net external debt.ㅇ The IMF expressed that today's foreign debt increase in Korea not as risky as in the past. (08. 6.24, IMF Annual Consultation)1) the ratio of external debt to GDP as end of 2006 : UK(394%), Germany(144%), US(85%), Japan(35%) 2. Foreign exchange reserve□ (Size) Korea holds the 6th largest foreign exchange reserve in the world, which is deemed adequate.ㅇ The size is well beyond the IMF guideline, which is a global reference for the adequate size of FX reserve.2)ㅇ The IMF(Sep.4) and Fitch(July.16), a global credit rating agency, affirmed that Korea's reserve was sufficient.□ (Composition) Korea's reserve is composed of assets with low risk such as deposits, sovereign bonds, federal agency securities and supernational bonds.ㅇ As of September 2008, the total of $240 billion reserve can be cashed in immediately.2) IMF guideline for adequate FX reserve is a total of 3-month current pa
