[2020 National Audit] Hong Nam-ki "Concerns Over Household Credit Loan Increase... DSR Should Be Expanded More Significantly"

October 7 Ministry of Economy and Finance National Audit

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Hong Nam-ki, Deputy Prime Minister for Economy and Minister of Strategy and Finance, said on the 7th, "There is a need to expand the Debt Service Ratio (DSR) to comprehensively control all types of loans."

Deputy Prime Minister Hong made this remark in response to a question from Woo Won-sik, a member of the Democratic Party of Korea, who pointed out the rapid increase in unsecured loans during the National Assembly's Planning and Finance Committee's audit of the Ministry of Strategy and Finance held at the Government Sejong Complex on the 7th. He said, "The recent increase in household unsecured loans is also a concern for the government."

He added, "The Financial Services Commission is cautious considering the capabilities of financial institutions under its jurisdiction, but I believe the DSR should be expanded more significantly than it is now."

The DSR refers to the ratio of the annual principal and interest repayment amount of all household loans?including mortgage loans, unsecured loans, overdraft accounts, and car installment loans?to annual income.

Currently, a DSR regulation of 40% (60% for non-bank sectors) is applied individually to new mortgage loans secured by houses valued over 900 million KRW in speculative areas and speculative overheating districts. Even if the borrower takes out additional loans such as unsecured loans after obtaining a mortgage loan, the borrower-level DSR regulation applies.

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