South Korea’s major banks are ramping up restrictions on home-backed loans and jeonse (long-term rental deposit) financing. (Image courtesy of Yonhap)
SEOUL, August 5 (Korea Bizwire) – South Korea’s major banks are ramping up restrictions on home-backed loans and jeonse (long-term rental deposit) financing, signaling a coordinated move to cool the property market and manage household debt more tightly.
On August 5, Hana Bank announced it would halt new applications for mortgage and jeonse loans scheduled for execution in September, including those submitted via loan brokers. The bank cited “voluntary household loan management” and a desire to “stabilize the housing market and ensure year-round stable credit supply.”
Hana Bank said it had been capping loan volumes by broker since June and will continue to process previously submitted applications. Requests for loans scheduled to be disbursed from October onward are still being accepted.
NH NongHyup Bank has already reached its cap for loans scheduled through September and is currently reviewing quotas for October. Similarly, IBK Industrial Bank of Korea stopped accepting any new mortgage or jeonse loan applications through brokers as of August 4.
Shinhan Bank closed applications for mortgages in the Seoul metropolitan area for August and September in mid-July and is now only processing requests for October. Starting August 6, the bank will also suspend conditional jeonse loans in non-metropolitan regions — a restriction previously limited to the capital area.
Exemptions will apply for applicants with lease contracts signed and deposits paid before August 6, or in cases of job relocation, children’s education, or medical treatment. In addition, Shinhan will bar jeonse loans for multiple-homeowners and block refinancing loans originating from other banks nationwide.
The tightened measures reflect mounting regulatory and internal pressure on lenders to rein in household debt amid persistent property market concerns under President Lee Jae-myung’s administration.
M. H. Lee (mhlee@koreabizwire.com)
