Saemaeul Geumgo Restricts Mortgage Loans for Multi-Homeowners... "Household Loan Management"

The National Credit Union Federation of Korea (NACUFOK) announced on the 24th that it will implement several proactive measures to manage Saemaeul Geumgo household loans. It explained that these proactive measures aim to support the strengthening of household debt management policies while ensuring loans are provided to genuine borrowers.

To this end, measures will include restricting mortgage loans for multi-homeowners, improving and strengthening the management of loan recruitment corporations, intensifying guidance against excessive interest rate competition, and conducting prior reviews of all interim payment loans by the federation.

NACUFOK stated, “We aim to implement a borrower-centered household loan policy that aligns with the supervisory authorities’ efforts to prevent excessive competition among credit unions, especially in mortgage loans, and to block speculative demand by guiding against excessive lending beyond repayment capacity, thereby managing household debt at an appropriate level.”

They also plan to temporarily implement prior reviews for all new interim payment loans. This measure responds to criticisms that Saemaeul Geumgo has been increasing group loans while banks have been reducing household loans. Currently, the federation only conducts prior reviews for Housing and Urban Guarantee Corporation (HUG)-guaranteed loans exceeding 200 billion KRW.

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The total amount of Saemaeul Geumgo household loans has been steadily decreasing over the past few years. It recorded 67.5056 trillion KRW in 2022, 61.2417 trillion KRW last year, and 57.8582 trillion KRW as of September this year. Among these, mortgage loans amounted to 24.9933 trillion KRW in 2022, 23.0201 trillion KRW last year, and 22.1097 trillion KRW as of September this year. According to the Financial Services Commission’s ‘Household Loan Trends as of September 2024,’ the increase in household loans by sector in September was about 5.7 trillion KRW for banks and 200 billion KRW for Saemaeul Geumgo. On a cumulative basis this year, banks increased loans by 40.9 trillion KRW, while Saemaeul Geumgo decreased by 3.4 trillion KRW.

However, NACUFOK explained that, fully recognizing the urgency of managing household debt, it plans to carefully manage household loans to prevent excessive competition or a balloon effect toward secondary financial institutions, while not overly restricting the funding needs of genuine borrowers or low-income groups.

Kim In, Chairman of NACUFOK, said, “While participating in the financial authorities’ efforts to manage household debt, we will strive to ensure that lending operations focus on genuine borrowers such as low-income households without homes. We plan to strictly manage excessive competition among credit unions to attract household loans.”

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