Banks Taking a Breather... Getting Loans in the Second Half of the Year Becomes More Difficult

NongHyup Bank Lowers Credit Loan Limit to 200 Million KRW from the 6th
Other Major Banks Also Tighten Loan Volume Following Regulatory Recommendations

[Asia Economy Reporter Seong Giho] It is becoming more difficult to obtain bank loans in the second half of the year. This is because the government has strengthened the regulation of the individual Debt Service Ratio (DSR) to 40% starting this month, and commercial banks are reducing loan limits and suspending the sale of some products.

According to the financial sector on the 5th, NH Nonghyup Bank will lower the maximum limit of personal credit loans from the existing 250 million KRW to 200 million KRW starting from the 6th to control the pace of household loan growth. This means that the credit loan limits for high-income earners and professionals, such as the ‘Exciting Worker Loan’ and professional loans, will be reduced. Since last month, Nonghyup Bank has also suspended Mortgage Credit Insurance (MCI) and Mortgage Credit Guarantee (MCG) loans, reducing the maximum limit for mortgage loans by up to 50 million KRW.

This trend is similar in other banks. Commercial banks have already adjusted the growth rate in the first half to 1-3% by reducing preferential loan interest rates and lowering high-value credit loan limits to meet the annual household loan growth rate guideline of 5% recommended by financial authorities.

Hana Bank has suspended the sale of four credit loan products, including Soldier Loans and management fee loans, since the end of last month, and Woori Bank also reduced the interest rate benefits of five credit loan products by up to 0.5 percentage points last month. Additionally, starting from the 12th of this month, the performance criteria to receive preferential interest rates will be raised.

Banks are adjusting loans because financial authorities previously instructed to manage the household loan growth rate at 5% this year. Furthermore, Lee Ju-yeol, Governor of the Bank of Korea, officially stated that the base interest rate will be raised once or twice within this year. In this situation, if household loans continue to increase sharply, even a slight rise in interest rates will significantly increase borrowers’ interest burdens.

A representative from a commercial bank said, "With the expansion of individual DSR regulations starting this month, banks are expected to slow down the pace," adding, "If loan regulations are further strengthened in the second half of the year, I understand that additional measures are being prepared to respond immediately."

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