"Am I supposed to live on monthly rent forever?"... 2030 Generation Without Homes 'Frustrated' Over 'Loan Regulations'

Citizens Uneasy as Financial Authorities Tighten Loans
Experts: "Regulations Without Addressing Causes... Young Generation Suffers Most"

Citizens are receiving consultations at a loan counter of a bank in downtown Seoul. The photo is unrelated to specific expressions in the article. Photo by Yonhap News.

[Asia Economy Reporter Kang Juhee] As some banks have suspended housing mortgage loans and jeonse loans under pressure from financial authorities to regulate the total amount of household debt, real demanders who intended to buy a house or secure jeonse through loans have fallen into great confusion. Especially among the younger generation who must rely entirely on loans to prepare for housing, there is an outpouring of backlash saying "even the opportunity to raise funds has been kicked away."

The government insists that these measures are unavoidable to curb the surge in household loans, but some argue that it reflects a strong will to control housing prices. Criticism has arisen that the responsibility for the rapid rise in housing prices is being unfairly shifted onto innocent citizens. Experts point out that by shifting the fundamental cause of household debt increase?the surge in real estate prices?onto loan regulations, it is making it even harder for real demanders to secure housing.

Earlier, NH Nonghyup Bank and Woori Bank suspended some household loan products following orders from financial authorities to manage the total amount of household loans. Nonghyup Bank decided to temporarily suspend new household jeonse loans from the 24th until the end of November. They will not allow increases or renewals of existing loans either. The maximum limit for personal credit loans was also reduced from the existing 200 million KRW to below 100 million KRW, within the annual salary. Woori Bank also announced it would suspend new jeonse loan issuance until September.

These government measures aim to curb the continuous increase in household debt, which surpassed 1,800 trillion KRW for the first time in history in the second quarter. According to the 'Household Credit (Provisional)' report released by the Bank of Korea on the 24th, the household credit balance stands at 1,805.9 trillion KRW.

This is an increase of 41.2 trillion KRW (2.3%) compared to the end of the first quarter (1,764.6 trillion KRW), which is 4.5 trillion KRW more than the first quarter's increase of 36.7 trillion KRW. Compared to the same period last year, it increased by 168.6 trillion KRW (10.3%), marking the largest increase since statistics compilation began in 2003.

Reference photo. As financial authorities increase pressure to regulate the total household debt, commercial banks have stopped issuing new jeonse loans and mortgage loans, causing real demanders to become increasingly anxious. / Photo by Yonhap News

As anxiety among citizens planning to buy homes or sign jeonse contracts rose due to the loan suspension measures, financial authorities quickly moved to calm the situation.

On the 23rd, the Financial Services Commission stated in a press release, "The possibility of loan suspension spreading to other financial companies with sufficient loan capacity compared to the original plan is very low." Currently, commercial banks other than Nonghyup Bank and Woori Bank are providing new household loans normally.

Nevertheless, public anxiety is not easily subsiding. There are concerns that if a 'balloon effect' occurs, where demand shifts to other banks instead of the banks that suspended loans, other banks might also sequentially suspend loans.

According to reports, just two days after Nonghyup Bank implemented loan restrictions on the 24th, Hana Bank announced on the 26th that it would reduce the supply of credit loans. KB Kookmin Bank and Shinhan Bank are also reportedly considering reducing credit loan limits.

As a result, especially among the younger generation in their 20s and 30s who have no assets and must rely entirely on loans, there is an outpouring of dissatisfaction that not only is 'owning a home' out of the question, but even the opportunity to raise funds to secure jeonse has been taken away.

Park, a 30-year-old office worker, said, "I feel sorry to ask for help from my parents and was trying to prepare for jeonse through loans somehow, but even that has been blocked. If this is not a message saying 'you should just live in monthly rent forever,' then what is it?" he vented his frustration.

Regarding loan regulations, the government maintains that these measures are inevitable to curb the increasing household debt. However, the prevailing view is that there is an underlying intention to stabilize real estate prices. Kim, a 37-year-old office worker, criticized, "Is it reasonable for banks to stop their main business of loans? They have announced real estate measures 26 times but failed to control housing prices, so they came up with loan regulations as an alternative."

Experts point out that if loan tightening is pursued without addressing the fundamental cause of the rapid rise in real estate prices, the damage to real demanders will worsen.

Professor Kim Taegi of Dankook University's Department of Economics said, "The government's direct involvement in the flow of funds and control over bank loans will negatively affect the financial industry. The fundamental problem behind the increase in household debt is the failure to control real estate prices. If the cause is not resolved and only loan regulations are implemented, young people who basically do not have much savings will inevitably suffer. Measures that real demanders can trust must be presented," he suggested.

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