Pre-sale Interim and Final Payment Loans Exempt from 'Individual DSR Regulation' Application

Financial Services Commission Sends Supervisory Regulation Document to Commercial Banks

[Asia Economy Reporter Lee Kwang-ho] Loans for relocation costs, interim payments, and balance payments for projects with tenant recruitment announcements made by the 16th are not subject to the personal Debt Service Ratio (DSR) regulations of 40% for banks and 60% for non-bank sectors, which will be gradually expanded from July. This exclusion also applies to newly obtained card loans.

According to financial authorities and the financial sector on this day, the Financial Services Commission recently sent a supervisory regulation (administrative guidance) document containing these details to commercial banks, related to the "Household Debt Management Plan" announced on the 29th of last month.

The document reportedly states that the administrative guidance will apply to loan applications submitted after the 17th.

Accordingly, loans for relocation costs, interim payments, and balance payments for projects with tenant recruitment announcements made by this day will follow the previous regulations. If there is no tenant recruitment announcement, construction notification or, in the case of reconstruction or redevelopment project association members, management disposition approval must be completed by this day.

Additionally, financial authorities decided that loan extensions, contract renewals that only change interest rates or maturity conditions, and refinancing will not be considered new loans. However, increases in existing loans, contract renewals, and refinancing will be subject to personal DSR regulations.

Furthermore, newly obtained card loans are excluded from personal DSR regulations. Previously, when announcing the household debt management plan, it was stated that some loans such as microcredit products for low-income earners, small credit loans under 3 million won, jeonse deposit loans, insurance policy loans, and savings deposit collateral loans would be excluded from DSR regulations. In addition to these, it appears to have been clarified that installment, lease, cash service, and card loans are also excluded from DSR regulations.

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