Commercial Banks Gradually Resume Jeonse Loans... "Relief for Actual Homebuyers" (Comprehensive)

NongHyup and Kookmin Bank Resume Jeonse Loans... Shinhan Bank to Remove Loan Agent Jeonse Loan Limits

[Image source=Yonhap News]

[Asia Economy Reporters Kwangho Lee and Kiho Sung] Financial authorities are excluding jeonse (long-term lease) loans from the total household debt management regulations, prompting the five major commercial banks, as well as internet banks and regional banks, to resume the jeonse loans they had previously 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 in August, will resume jeonse loans on the 18th.

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

KB Kookmin Bank will exclude jeonse loans from the new household loan limits managed by each branch starting on the 18th. Previously, Kookmin Bank had managed new household loan limits by branch since the 5th.

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

Hana Bank will maintain its 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 could previously 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 monthly jeonse deposit loans this week, and BNK Gyeongnam Bank and BNK Busan Bank, which halted new jeonse loans, are also expected to resume jeonse loans.

Financial authorities plan to strengthen screening processes as demand may surge rapidly once the suspended jeonse loans resume.

A financial authority official stated, "We will hold frequent inspection meetings to ensure smooth implementation from next week and prevent any issues," emphasizing, "We will carefully scrutinize 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, we will form a joint task force (TF) with the Financial Services Commission, Financial Supervisory Service, and banks to share and monitor balance payment loan information for over 110 projects to prevent cases where residents cannot move in due to unpaid balance loans."

A representative from a commercial bank said, "There is some relief and capacity for genuine borrowers such as jeonse loans," but added, "The financial authorities' existing stance on managing 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?stood at 703.4416 trillion KRW, a 5% increase compared to the end of last year. The loan limit set by financial authorities, capped at around a 6% increase, leaves about 13 trillion KRW remaining.

A financial authority official expressed, "Since the pace and scale of household debt growth 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 in a meeting with reporters the previous day, "We will carefully devise measures to ensure there are no inconveniences for genuine borrowers."

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