Starting Next Week, 'Jeonse Loans' Released... "Relief for Genuine Homebuyers"

NH Nonghyup Bank Resumes Jeonse Loans... Shinhan Bank Removes Loan Agent Jeonse Loan Limits

The view of apartment complexes in Songpa and Gangnam areas of Seoul from the 'Seoul Sky' observatory at Lotte World Tower in Jamsil, Songpa-gu, Seoul (Photo by Yonhap News)

[Asia Economy Reporter Kwangho Lee] As financial authorities exclude jeonse (long-term lease) loans from the total household debt management regulations, the five major commercial banks, as well as internet banks and regional banks, are resuming jeonse loans that had been suspended or reduced.

According to financial authorities and the financial sector on the 15th, NH Nonghyup Bank, which had completely halted new real estate-related loans including jeonse loans since August, will resume jeonse loans on the 18th.

Shinhan Bank will also remove the limit on jeonse loans through loan solicitors starting from the 18th. Shinhan Bank had limited jeonse loans through loan solicitors to 500 billion KRW from this month.

Woori Bank plans to allocate additional jeonse loan limits only to genuine borrowers. Since last month, Woori Bank has been managing total loan volume by applying loan limits ranging from 500 million to several billion KRW per branch monthly.

KB Kookmin Bank and Hana Bank will maintain the policy of granting jeonse loans only within the range of the increased deposit (jeonse price) for the time being. For example, if the jeonse price rises from 500 million KRW to 700 million KRW, an increase of 200 million KRW, the tenant previously could borrow up to 80% of the jeonse deposit, which was 560 million KRW, but now additional loans are only possible up to the increased amount of 200 million KRW.

KakaoBank, which suspended general jeonse and monthly rent deposit loans this week, and BNK Gyeongnam Bank and BNK Busan Bank, which halted new jeonse loans, are also expected to resume jeonse loans.

The financial authorities plan to strengthen screening as demand may surge suddenly once the suspended jeonse loans resume.

A financial authority official said, "We will hold frequent inspection meetings to ensure smooth implementation from next week and prevent any issues," emphasizing, "We will carefully review the loan screening process to prevent excessive handling of unnecessary jeonse loans."

He added, "Especially for group loans such as balance payments received upon apartment move-in, to prevent cases where residents cannot move in due to failure to pay the balance, a task force (TF) composed of the Financial Services Commission, Financial Supervisory Service, banks, and other financial sectors will be formed to share and monitor balance payment loan handling information for over 110 projects."

A representative from a commercial bank said, "There is some breathing room for genuine borrowers such as jeonse loans," but added, "The financial authorities' existing stance to manage household debt remains unchanged, so we need to continue monitoring the increase in household loans."

As of the 7th, the outstanding household loans of the five major commercial banks?Kookmin, Shinhan, Hana, Woori, and Nonghyup?amounted to 703.4416 trillion KRW, a 5% increase compared to the end of last year. The loan limit set by the financial authorities, up to the 6% range, leaves about 13 trillion KRW remaining.

A financial authority official expressed, "Since the pace and scale of household debt increase are too rapid and large, we will continue efforts with the banking sector to manage household debt." The financial authorities plan to announce additional management measures for the soft landing of household debt shortly after the national audit.

Financial Services Commission Chairman Seungbeom Ko said at a meeting with reporters the previous day, "We will carefully devise measures to ensure that genuine borrowers do not face inconvenience."

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