NongHyup Bank to Stop Selling 50-Year Mortgage Loans After This Month
Authorities Point to 50-Year Mortgage Loans as Cause of Household Debt Increase
Sold 2 Trillion Won Worth and Ended
As financial authorities pointed to 50-year mortgage loans as a cause of household loan growth, NH Nonghyup Bank decided to suspend sales of its 50-year mortgage loan product less than two months after launching it. Nonghyup Bank had introduced the 'Chaeum Fixed-Rate Mortgage Loan (50-year hybrid)' with a 50-year term on the 5th of last month.
As of the 17th, the sales amount (loan disbursement) of this product reached 702.8 billion KRW, and considering the current number of consultations, it is expected to reach the 2 trillion KRW limit by the end of this month. When launching the product, Nonghyup Bank internally planned it as a special product with a 2 trillion KRW limit but decided to review the limit after monitoring the situation.
However, as recent controversies arose with financial authorities citing 50-year mortgage loans as one of the causes of household loan increases, the bank decided to limit sales to the originally planned scale of 2 trillion KRW.
Major banks began offering 50-year mortgage loan products in earnest starting last month. Nonghyup Bank started sales on the 5th, Hana Bank on the 7th, Kookmin Bank on the 14th, Shinhan Bank on the 26th, and Woori Bank extended its mortgage loan term from a maximum of 40 years to 50 years starting the 14th.
On the 16th, Financial Services Commission Chairman Kim Joo-hyun mentioned, "We will consider age restrictions for 50-year mortgage loans," and on the same day, Financial Supervisory Service Governor Lee Bok-hyun said, "We plan to inspect whether banks have properly managed DSR in mortgage loan calculations."
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At a bank CEOs meeting held on the 17th, the Financial Supervisory Service stated that it would review whether the Debt Service Ratio (DSR) calculation for 50-year mortgage loans was appropriate and would pursue institutional improvements if necessary.
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