An apartment complex in Yeongtong District, Suwon, Gyeonggi Province. The government recently designated all of Seoul and 12 areas in Gyeonggi Province as regulated zones and land transaction permit areas in response to overheating housing prices. (Yonhap)
SEOUL, Oct. 20 (Korea Bizwire) – The country’s chief financial regulator said Monday that financial authorities are ready to take additional measures, if needed, to rein in soaring household debt.
During a parliamentary audit, Lee Eog-weon, the chairman of the Financial Services Commission (FSC), said his agency is taking preemptive measures to secure financial stability.
“We are ready to take more steps, if necessary (to curb household debt), while keeping a close eye on the market situation,” he said.
His remarks came as household loans extended by South Korean banks grew at the slowest pace in six months in September on tighter lending rules aimed at curbing surging housing prices and household debts.
Banks’ outstanding household loans stood at 1,170.2 trillion won (US$825.07 billion) as of end-September, up 2 trillion won from a month earlier, marking a sharp deceleration from a 4.1 trillion-won gain seen the previous month, and the slowest growth since March.
But there have been no signs of a letup in home prices in Seoul, prompting authorities to expand regulatory areas and further tighten lending criteria.
Earlier this month, the government designated all 21 districts in Seoul as speculative zones while introducing tougher lending rules to rein in rapidly rising housing prices in the capital region, a move it said may also require tax revisions in the near future.
Twelve cities in Gyeonggi Province, including Gwacheon, Yongin, Uiwang and Hanam, were also newly designated as regulatory zones.
Financial regulations on mortgage loans were also tightened.
The government will apply a mortgage loan ceiling of 600 million won for homes priced 1.5 billion won or less, 400 million won for homes valued at between 1.5 billion won and 2.5 billion won, and 200 million won for homes worth more than 2.5 billion won.
In addition, the government hinted at the possibility of raising real estate-related tax to “steer capital toward productive sectors.”
(Yonhap)
