Economic, Monetary, Financial, and Foreign Exchange Chiefs Met on Sunday... Choo Kyung-ho: "Next Year, Household Loan Variable Interest Rate Share to Decrease by 5.0%p"

[Asia Economy Sejong=Reporter Kim Hyewon] Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho stated on the 24th, "If the scheduled Anshim Conversion Loans are supplied smoothly by next year, the proportion of variable-rate household loans in the banking sector is expected to decrease by up to 5.0 percentage points, from around 78% to below 73%."

Deputy Prime Minister Choo made these remarks during an emergency macroeconomic and financial meeting (Geumhoe) held at the Seoul Bankers' Hall, where they discussed the recent impact of rising interest rates on vulnerable sectors and possible countermeasures.

The meeting was attended by Deputy Prime Minister Choo, Financial Services Commission Chairman Kim Joo-hyun, Bank of Korea Governor Lee Chang-yong, Financial Supervisory Service Governor Lee Bok-hyun, and Presidential Office Economic Secretary Choi Sang-mok. Notably, this was the first time since Chairman Kim's appointment that the heads responsible for macroeconomics, monetary policy, finance, and foreign exchange gathered in one place.

Deputy Prime Minister Choo explained, "To stably supply the Anshim Conversion Loans, which convert variable interest rates to fixed rates, the government supported the Korea Housing Finance Corporation with 109 billion won through the second supplementary budget in May, and the Bank of Korea plans to invest 120 billion won this year." He added, "Next year, the government and the Bank of Korea will additionally invest over 400 billion won to accelerate efforts to improve the household debt structure."

The Anshim Conversion Loan is a policy financial product supplied by the Korea Housing Finance Corporation that allows borrowers with variable-rate mortgage loans from commercial banks to switch to fixed rates.

Deputy Prime Minister Choo also stated, "Regarding the issuance of mortgage-backed securities (MBS) by the Korea Housing Finance Corporation to secure funds for the Anshim Conversion Loans, the government and the Bank of Korea are preparing various measures to prevent increased volatility in the bond market."

[Image source=Yonhap News]

Regarding domestic and international financial market trends, Deputy Prime Minister Choo said, "Last week, the European Central Bank (ECB) raised interest rates for the first time in 11 years, and this week, further rate hikes by the U.S. Federal Reserve (Fed) are expected, accelerating the pace of global monetary tightening. The entire world is navigating through overlapping uncertainties of inflation and economic slowdown concerns to find the optimal solution, and our economy is no exception." He added, "In this situation, what is most important is to thoroughly manage domestic and external risks to prevent the transmission and spread of overseas crisis factors domestically. Externally, we must strengthen the buffer against external shocks, and internally, meticulous and proactive inspections and preparations are necessary to ensure there are no leakages in specific sectors."

Deputy Prime Minister Choo stated, "Going forward, our macro-financial team will meet frequently not only in public forums but also privately to share perceptions of domestic and international economic and financial conditions. We will maintain heightened vigilance, closely monitor domestic and external risk factors, proactively respond to uncertainties caused by rising interest rates, and create the optimal policy mix."

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