Hana Bank Also Stops Refinancing Loans... Surge of Loan Refugees 'Restless' (Comprehensive)

Household Loan Growth Rate Nears Financial Authorities' Recommended Limit
Banking Sector: "Loan Tightening Must Begin in Q4"
If Additional Regulations Include Secondary Financial Institutions, Loan Freeze Inevitable
Real Demand Borrowers' Dissatisfaction Rising

[Asia Economy Reporter Seong Giho] As banks continue to halt loans one after another, loan refugees are emerging in large numbers. In particular, real demanders who are in urgent need of funds due to soaring house prices and jeonse (long-term lease) prices are showing signs of anxiety.

If additional regulations from financial authorities are introduced, it is expected that not only banks but also insurance companies, card companies, savings banks, and mutual finance institutions will tighten their money supply comprehensively, leading to intensified customer complaints over the year-end loan crisis.

According to the financial sector on the 6th, Hana Bank temporarily suspended new refinancing loans (loan switching) for some unsecured loans and mortgage loan products starting from 6 p.m. the previous day. The products for which new loans were blocked are ‘Hana OneQ Unsecured Loan’ and ‘Hana OneQ Apartment Loan,’ and no date for resuming sales was specified.

This measure considers the annual household loan volume regulation by financial authorities. Especially for refinancing loans, there is concern about a ‘balloon effect’ as many customers come from other banks. Previously, Hana Bank had suspended loan handling for a while after three out of six contracted loan brokerage firms exceeded their loan limits.

The loan suspension in the banking sector started with NH Nonghyup Bank in August. Nonghyup Bank stopped handling new loans such as real estate secured loans from August 24 after the household loan growth rate in July (7.1%) exceeded the government’s recommended range (annual 5-6%).

The problem is that as Nonghyup Bank closed its loan window, demand quickly shifted to other banks. Due to growing concerns, KB Kookmin Bank limited the jeonse loan limit within the range of the increased deposit amount. It also reduced household loan limits by changing the collateral criteria for move-in balance loans in group loans from KB market price or appraisal value to the lowest among the sale price, KB market price, and appraisal value.

SC First Bank also temporarily suspended the sale of some variable interest rate products among mortgage loans, such as the First Home Loan, which applied the 1-year and 3-year financial bond rates as the base rate, starting from the 7th of last month.

IBK Industrial Bank restricted the subscription to Mortgage Credit Insurance (MCI) and Mortgage Credit Guarantee (MCG) for mortgage loans. MCI applies to apartments, and MCG applies to multi-family and row houses. Suspending these reduces the loan limit borrowers can receive. For apartments in Seoul, the loan limit decreases by 50 million KRW.

Internet-only banks, which had been aggressively expanding loan operations, also closed their loan windows. KakaoBank decided to suspend overdraft loans until the end of the year and reduced the overdraft loan limit from the previous 50 million KRW to 30 million KRW.

The household loan growth target rate recommended by financial authorities to commercial banks is 5-6%. As of the end of last month compared to the end of last year, the household loan growth rate of the five major banks was 4.88%. Nonghyup Bank was 7.29%, Kookmin Bank 4.90%, Woori Bank 4.05%, and Shinhan Bank 3.02%, with banks exceeding 5% facing the need for strong management. Hana Bank’s household loan growth rate as of last month was 5.19%, close to the target.

Moreover, if the financial authorities announce additional household debt regulations this month, it is expected to become even more difficult to obtain loans from banks in the future. Especially, as the relatively low-threshold secondary financial sector is also expected to be included in the additional regulatory measures, the loan freeze is likely to become a reality.

A representative from a commercial bank said, “Usually, total volume management is required at the end of the year, so operations are conservative, but this year, loan tightening will be even stronger,” adding, “The entire banking sector is on emergency footing.”

Complaints from real demanders who need to secure funds immediately have even reached the Blue House’s public petition board. A person identified as A, who posted on the petition board, said, “I cannot sleep after reading the shocking news about blocking group loans,” and lamented, “Looking at the current regulations, instead of happily preparing for the imminent move-in, I find myself worrying about loan trends, which feels like seeing my own future.”

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