Some commercial banks are ramping up their final push for mortgage loan sales through loan brokerage agencies. With the implementation of the third stage of the Debt Service Ratio (DSR) regulation and the June 27 Household Debt Management Plan starting in July, banks do not expect a significant increase in loan demand in the second half of the year. As a result, there is a prevailing sense that this is effectively the last opportunity for active loan sales.

▲A loan agent from a commercial bank is conducting loan sales for a bank that offers 40-year mortgage loans.

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According to the financial sector on July 3, commercial banks are intensifying their final round of loan sales following the announcement of the June 27 Household Debt Management Plan. The June 27 measures are considered extremely strict, as they uniformly limit the maximum mortgage loan amount to 600 million won regardless of the borrower's repayment ability, and reduce the maximum mortgage loan term to 30 years. As a result, confusion is spreading in the market, and banks are seizing this as an opportunity for niche sales.

A loan broker said, "If the contract was signed and the deposit was paid before June 27, prior to the announcement of the regulations, a 40-year maturity mortgage loan is possible without any issues," adding, "Currently, Bank A and Bank B offer this option."

Another loan broker stated, "For those who completed the contract signing and deposit payment before June 27, Bank B, Bank C, and D Life Insurance offer 40-year maturity mortgage loans, with loans available around 4% depending on performance and conditions."

Previously, in response to the financial authorities' request to manage household debt, commercial banks had announced that they would temporarily suspend accepting mortgage loan applications through loan brokers or would manage the process by setting loan limits.

An official from a commercial bank stated, "We are currently operating by assigning loan limits to each loan brokerage agency. Agencies with available limits are still accepting loan applications."

In fact, Hana Bank and Shinhan Bank, among commercial banks, showed that their mortgage loan growth rates were not significantly high from the beginning of this year until May. Among the five major commercial banks, from January to May this year, NH Nonghyup Bank recorded the highest mortgage loan growth rate at 5.6%, followed by Woori Bank (2.4%), Shinhan Bank (1.6%), KB Kookmin Bank (1.4%), and Hana Bank (0.8%).

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Bank branches are also experiencing a hectic atmosphere. The June 27 Household Debt Management Plan was implemented immediately, unlike previous policies that allowed for a grace period, leading to a surge in inquiries. Additionally, there has been a rush of mortgage loan applications from customers trying to avoid the third stage of the DSR regulation. A branch employee at a commercial bank commented, "Working overtime has become the norm these days, and there is no such thing as a regular closing time," adding, "This is because mortgage loan reviews are piling up for loans that need to be finalized in July and August."

Meanwhile, there is also criticism of these sales tactics by commercial banks. Despite a declining interest rate environment, banks have maintained high interest rates for household loans, citing the need for household debt management, and are now taking advantage of market confusion. Previously, commercial banks kept mortgage loan interest rates high even when rates were falling, justifying it as part of household debt management. In July, they raised mortgage loan interest rates across the board. Woori Bank, for example, increased its main mortgage loan rate from an annual 3.51-4.71% as of June 30 to 3.57-4.77% as of July 1, a 0.06 percentage point increase. This was done by raising the additional margin, even though the benchmark rate used to determine mortgage loan rates actually fell by 0.01 percentage points. Shinhan Bank raised its rate by 0.08 percentage points compared to the previous month, while Hana Bank increased its refinancing loan rate from 4.23% per annum on June 30 to 4.33% per annum as of July 1, a 0.1 percentage point increase. As a result, real borrowers are expected to face a heavier interest burden.