"Inquiries Surge as Last Chance to Get 'Yeongkkeul' Loans Closes"

From the 30th, DSR Regulations and
High-Income Borrowers' Credit Loan Restrictions
Yeouido and Gangnam Areas
Consultations for Early Loan Applications

[Asia Economy Reporters Sunmi Park and Minyoung Kim] On the morning of the 16th, the first business day after the announcement of targeted regulations on high-income earners' credit loans, the Yeouido branch of Hana Bank was bustling. Right after opening the bank doors that morning, loan officers were busy answering calls about loan inquiries. Although few customers visited the branch in person early on a Monday, the phone kept ringing at every counter. The situation was similar at the Gangnam area KB Kookmin Bank branch. That morning, branches of commercial banks were flooded with calls from customers asking about additional loan limits, and bank staff were busy explaining the changing regulations. In particular, branches located in areas with many high-income earners were overwhelmed with inquiries from people trying to secure more credit loans before the regulations took effect.

On the 13th, the Financial Services Commission and the Financial Supervisory Service jointly announced household loan management measures aimed at strengthening the total debt service ratio (DSR) regulations for high-income earners to curb large credit loans. This is a 'targeted regulation' measure designed to prevent money from flowing into the real estate market and other investment purposes. If a high-income earner with an annual salary of 80 million won or more takes out a credit loan of 100 million won or more, DSR regulations (40% for banks, 60% for non-banks) will be applied on an individual basis. Additionally, if someone takes out a credit loan exceeding 100 million won and buys a house in a regulated area within one year, the loan will be recalled within two weeks. These regulations will take effect from the 30th of this month.

Increase in Credit Loan Inquiries at Banks

As a result, there has been a surge in loan inquiries from people trying to secure loans before the implementation date of the 30th. A representative from Hana Bank in Yeouido said, "Most high-income earners already have credit loans, so there are many inquiries from existing credit loan holders," adding, "Borrowers with loans nearing maturity mainly ask whether they can extend the maturity and whether their loan limits will be reduced after the 30th." The representative also noted, "Although existing borrowers are not affected by this measure, many are worried that their loan limits might be reduced or their loans recalled."

At Woori Bank's Yeouido Central Financial Center, there were almost no walk-in customers asking about loans in the morning. However, there was a flood of phone inquiries asking whether credit loans are currently available.

Bank branches in Jamsil, where many high-income earners are concentrated, also received many questions from people who had already taken out credit loans exceeding 100 million won, asking whether they could get additional housing purchase loans.

Online real estate communities have also seen frequent inquiries about bank loans. In response to a question expressing concern about the difficulty of obtaining credit loans exceeding 100 million won for those with an annual income over 100 million won starting from the 30th, many comments suggested that the only option is to secure the loan in advance. A high-income, non-homeowner planning to purchase a house under 900 million won posted that they intended to use a credit loan as short-term funds in January next year to pay the balance combined with a mortgage, proceed with interior work, and then repay the credit loan with the deposit from a jeonse (long-term lease) house. However, due to the sudden new government loan regulations, they are worried about funding disruptions and are considering taking out the maximum credit loan before the 30th.

However, many on-site observers are concerned that this targeted regulation on high-income earners' credit loans may instead fuel 'all-in' borrowing and further drive up real estate prices. The interpretation is that as the government's regulations tighten, people who feel anxious about the increasing difficulty of securing loans for housing will rush to borrow funds as quickly as possible to enter the housing market, leading to continued loan growth and rising real estate prices for the time being. In particular, the financial authorities plan to lower the target ratio for high DSR loans in the financial sector, indicating that loan tightening will continue, and there is a widespread perception that now is the 'last chance' to get a loan.

Critics also point out that the sudden tightening of loans by financial authorities blocks new loan channels for people who have been diligently repaying their debts, spreading the perception that 'debt should not be repaid when money is available, but rather borrowed as much as possible when it can be obtained and held for investment.'

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