Shinhan Bank and KB Kookmin Bank announced stricter mortgage lending controls starting May 10 to curb household debt growth. Shinhan Bank will temporarily suspend Mortgage Credit Insurance (MCI) and Mortgage Credit Guarantee (MCG) products, while KB Kookmin Bank will cap mortgage loans for home purchases at 300 million won nationwide, down from the previous 600 million won limit in the capital region. The measures reflect banks' proactive risk management as household loan balances at five major Korean banks reached 648.035 trillion won as of May 2, approaching the annual increase target of approximately 4.3 trillion won set by financial authorities.
Shinhan Bank Suspends Mortgage Guarantee Products Starting May 10
Shinhan Bank will implement household loan risk management measures starting May 10 until further notice, according to financial industry sources on May 9. The bank will temporarily suspend the handling of MCI (Mortgage Credit Insurance) and MCG (Mortgage Credit Guarantee) products applied to mortgage loans. Group loans, refinancing loans, and loan renewals are excluded from the suspension to minimize inconvenience for actual homebuyers. Shinhan Bank explained the measure aims to maintain a loan supply stance centered on actual demand while managing total volume more stably, considering recent household debt growth trends.
KB Kookmin Bank Reduces Mortgage Loan Cap to 300 Million Won
KB Kookmin Bank will limit the maximum amount for home purchase mortgage loans to 300 million won nationwide starting May 10. The previous limit for home purchase loans in the capital region and regulated areas was 600 million won, which has been reduced by half. Non-regulated areas, which previously had no limit restrictions, will now also have a 300 million won cap applied. The measure applies based on the bank's document submission date, not the housing sales contract date. Even if a sales contract has already been signed, the strengthened 300 million won limit regulation applies if loan document submission is not completed by May 9. Bank branches reportedly experienced a rush of last-minute loan consultations and document submissions on May 9, one day before the regulation implementation. Group loans such as moving expenses and interim/final payments, policy financial fund loans and Bogeumjari loans, and home purchase and auction fund loans for jeonse fraud victims maintain existing standards. KB Kookmin Bank internal refinancing and re-loans without loan amount increases, and debt assumption due to inheritance are also excluded from application. The maximum 200 million won limit for home purchase loans on properties exceeding 2.5 billion won in sales price in the capital region and regulated areas remains unchanged. A KB Kookmin Bank official stated, "This is a self-management plan to preemptively adjust stable management and portfolio of household loans," adding, "We plan to operate while considering both protection of actual users and financial market stability."
Major Banks Approach Annual Household Loan Growth Target
The lending threshold at banks is already rising. Shinhan Bank exhausted all new mortgage loan submission quotas through loan recruiters within one week this month and temporarily suspended related submissions. Hana Bank also suspended mortgage loan submissions through loan recruiter channels to be executed next month starting May 2. As of May 2, the household loan balance excluding policy loans at the five major banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) stood at 648.035 trillion won, an increase of 3.0335 trillion won from the end of last year. This represents a substantial portion of the household loan increase target for this year (approximately 4.3 trillion won) that the banking sector submitted to financial authorities, and some banks are known to have exceeded their targets. Industry observers note that banks are raising their own risk management levels as financial authorities continue their household debt management stance.
FAQ
What mortgage lending restrictions did Korean banks announce on May 9?
Shinhan Bank announced it will suspend MCI and MCG mortgage guarantee products starting May 10, while KB Kookmin Bank announced it will cap mortgage loans for home purchases at 300 million won nationwide starting the same date, down from 600 million won in the capital region.
Why are Korean banks tightening mortgage lending controls?
Banks are implementing stricter controls to curb household debt growth and manage loan portfolios, as the five major banks' household loan balance reached 648.035 trillion won as of May 2, approaching the annual increase target of approximately 4.3 trillion won submitted to financial authorities.
