Seungbeom Go "Additional Household Debt Measures to Be Announced After Chuseok... Loan Maturity Extensions Next Week" (Comprehensive)

Detailed review of 20-30 items... "Preventing harm to actual borrowers"
Decision on loan maturity extension next week... Disagreement over interest repayment deferral
"Platform regulation... Unrelated to innovative financial services"

Financial Services Commission Chairman Ko Seung-beom is answering reporters' questions after the meeting between the Financial Services Commission Chairman and Financial Holding Company Presidents held at the Korea Federation of Banks in Jung-gu, Seoul on the 10th. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Kim Jin-ho] Ko Seung-beom, Chairman of the Financial Services Commission, officially announced additional household debt measures after Chuseok. It is reported that tightening measures will likely extend from mortgage loans and credit loans to jeonse loans. There is also talk of possibly advancing the application timing of the Debt Service Ratio (DSR).

Chairman Ko made these remarks on the 10th after a 'Meeting with the Chairmen of the Five Major Financial Holding Companies' held in Myeong-dong, Jung-gu, Seoul, when speaking with reporters.

Regarding additional household loan regulations, Chairman Ko said, "We will prepare supplementary measures after Chuseok while observing various situations," adding, "Although I cannot specify details, at the practical level, we are conducting detailed reviews on 20 to 30 items."

According to the financial sector, the biggest concern of the financial authorities is the level of regulation on jeonse loans. Jeonse loans are not subject to DSR regulations and generally have relatively low interest rates. The financial authorities believe there are side effects where non-homeowners, who can cover the jeonse deposit with their own means, take out excessive loans to engage in debt-financed investment (debt investment) or gap investment (buying with jeonse deposits).

In fact, the scale of jeonse loans has increased significantly this year. As of the end of last month, the outstanding household loans of the five major banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?stood at 698.8149 trillion won, up 4.1% (28.661 trillion won) from 670.1539 trillion won at the end of last year. Among these, mortgage loans increased by 19.6299 trillion won, accounting for 68.4% of the total household loan increase. Notably, jeonse loans rose by 14.7543 trillion won, exceeding half (51.4%) of the total increase.

However, there is also a plan to establish protective measures for genuine borrowers who may be affected by the regulation of jeonse loans. Chairman Ko stated, "The decision on whether to regulate jeonse loans has not yet been made," but added, "We are giving much thought to protecting genuine borrowers and will devise ways to ensure they are not harmed."

Regarding the Financial Services Commission’s target annual household loan growth rate (5?6%), he explained, "The conditions are not easy," but said, "We will strive to maintain it around the 6% level as much as possible."

On the extension of the COVID-19 loan maturity extension and interest payment deferral measures, he was reserved, saying, "We will announce internally." According to Chairman Ko, there is little disagreement on extending loan maturities, but there has been opposition from financial holding company chairmen regarding interest payment deferrals. He said, "We will continue to deliberate until the plan is announced next week," adding, "If interest payment deferral is decided, we will also consider a soft landing plan."

Regarding whether to appeal the lawsuit outcome related to overseas interest rate-linked derivative-linked funds (DLF), he said, "We will discuss with the Financial Supervisory Service Commissioner and decide soon," adding, "Since there were recommendations from financial sector associations concerning internal control issues, we will consider institutional improvements."

When asked if platform regulations on big tech and fintech would disrupt innovative finance such as the financial regulatory sandbox, he replied, "No." He emphasized that the principle of same function, same regulation for platforms is for consumer protection.

Meanwhile, in his opening remarks before the meeting, Chairman Ko presented the basic principle of financial policy and supervision as ‘market-friendly policies and supervision that respect the creativity and autonomy of financial companies.’ He said, "Regarding management decisions such as interest rates, fees, and dividends, we will, in principle, respect the autonomous decisions of financial companies as much as possible," adding, "Even when unavoidable interventions are necessary for financial stability and macroprudential management, we will proceed with ▲ minimal intervention ▲ fair and transparent procedures ▲ and market-friendly methods."

He added, "All measures will be carried out based on sufficient communication and consultation to gain the consensus of market participants."

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