Government reduces policy finance loans
Applicable to most banks from the 21st
There are two main reasons why the Ministry of Land, Infrastructure and Transport and the Housing and Urban Guarantee Corporation (HUG) requested that commercial banks restrict the handling of stepping stone loans. When calculating the amount of a stepping stone loan, a small rental deposit deduction must be applied, and new apartment stepping stone loans made with back-secured collateral should no longer be handled. Starting from the 21st, most commercial banks, including Shinhan, Hana, Woori, and NH Nonghyup Bank, will implement it.
Homes eligible for stepping stone loans are worth 500 million won or less (600 million won for newlywed households and households with two or more children). Stepping Stone Loans can be loaned up to 70% of the loan-to-value ratio (LTV) within a maximum of 250 million won per household (400 million won for newlywed households and households with two or more children).
However, when actually receiving a loan, only the amount minus the small rental deposit (air defense, 25 million to 55 million won depending on region), which is the highest priority repayment guaranteed to the tenant, can be borrowed. Until now, loans up to a small rental deposit were provided by signing up for a guarantee product, but this means that this will be excluded in the future. For those who want to take out a loan, the loan amount is reduced.
For example, for a house worth 300 million won in Seoul, previously, if 70% LTV was applied and air defense was replaced with guarantee insurance, a loan of 210 million won could be obtained. In the future, the loan amount will be reduced by the amount of air defense (55 million won in Seoul), and the actual amount that can be received will be 155 million won. It is expected that there will be cases where you will not be able to get a loan at all as collateral is not taken care of. Post-secured collateral is a loan in which a bank first provides a loan when it is difficult to secure collateral, such as an apartment before completion, and then converts it into collateral after the house is completed. Consumers who are about to move into newly built apartments will not be able to receive loans.
The banking industry believes that the financial authorities are making all-out efforts to suppress household lending, and even the Ministry of Land, Infrastructure and Transport is taking part in policy finance. However, there are concerns that the side effects will only increase as policy funds, which are mainly used by the common people, are tightened. An official from the financial sector said, “It is unlikely that loan seekers will immediately give up on moving in just because collateral for collateral is limited,” adding, “There are concerns that the damage to borrowers may only increase.” In addition, since the homes being targeted are less than 500 million won, there are questions about whether the loan regulation effect that can be achieved through this will be as effective as the government expects.
Household loans in the financial sector are decreasing. Last August, household loans increased by 9.7 trillion won, but decreased to 5.2 trillion won in September with the implementation of the second-stage stress Debt Service Ratio (DSR) regulation. On the other hand, stepping stone loans, which are policy loans, and prop loans, which are leasehold loans, were calculated to have increased by 3.8 trillion won last month.
[김정환 기자]
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