Financial Services Commission "Thorough Monitoring of Stocks and Real Estate... DSR Application Inspection in Speculative Areas"

Vice Chairman Chairs Financial Risk Response Team Meeting
"Capital Inflow into Stocks and Real Estate, Price Increase"

Son Byung-du, Vice Chairman of the Financial Services Commission / Photo by Moon Ho-nam munonam@

[Asia Economy Reporter Kim Hyo-jin] Sohn Byung-doo, Vice Chairman of the Financial Services Commission, stated on the 24th that the concentration of funds into stocks and real estate, along with the increase in related debt, poses potential market risks and that these will be closely monitored.

Vice Chairman Sohn made these remarks while presiding over a financial risk response team meeting held at the Korea Federation of Banks in Jung-gu, Seoul, in the morning. He diagnosed, "In the recent low-interest-rate environment, funds are flowing into assets such as stocks and real estate to secure high-yield investment opportunities, causing related asset prices to rise."

Regarding the stock market trend, Vice Chairman Sohn said, "For the stock market to continue growing as an attractive investment destination, the market must operate soundly and growth-oriented companies must be listed," adding, "We will strengthen organic cooperation systems among related agencies to eradicate unfair trading such as insider trading in the future."

He further added, "We plan to prepare and announce measures to ensure that unfair trading is eradicated throughout all processes of prevention, action, and punishment."

Vice Chairman Sohn mentioned, "We will also pursue measures to enhance the role of the capital market so that abundant liquidity can be utilized to support funding for excellent and innovative companies through the stock market."

Regarding the government's real estate measures aimed at demand suppression and price stabilization, he said, "Through inspections by the Financial Supervisory Service, we will verify whether the total debt service ratio (DSR) is being properly applied to borrowers of mortgage loans on houses exceeding 900 million KRW in speculative and overheated speculative districts, and we will guide and supervise financial companies if any issues are found."

Vice Chairman Sohn explained, "Starting from September, the expiration date for fulfilling the conditions of disposal and moving-in attached to mortgage loans introduced in September 2018 will arrive. As previously announced, each financial institution will verify whether the conditions have been met, and if borrowers fail to provide evidence, loan recovery and registration of contract violation will be carried out without delay."

The government’s 2018 September real estate measures allowed one-homeowners in regulated areas to obtain mortgage loans on the condition that they dispose of their existing home within two years. For non-homeowners, mortgage loans could be obtained in regulated areas for homes exceeding 900 million KRW on the condition of moving in within two years. Violations of these conditions result in a three-year ban on housing-related loans.

Meanwhile, the Financial Services Commission has identified that from February to the 19th of this month, a total of 786,000 cases amounting to 88.2 trillion KRW in new loans, maturity extensions, and other financial support have been provided through commercial banks.

This content was produced with the assistance of AI translation services.