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Finance

After tax overhaul, government weighs tweaks to loan rules, eases balance loans, tightens lease loans

South Korea is expected to step up discussions on follow-up measures on real estate and household lending after releasing a tax overhaul plan. The basic framework for managing household loans, including LTV and DSR rules, is set to remain. Authorities are considering easing funding burdens for end-users who signed contracts before tighter rules by partly exempting some balance loans from banks’ total loan caps. At the same time, they are weighing tougher rules for jeonse loans, including lower limits and guarantee ratios.

Finance

Jeonse loans should focus on vulnerable households; fees needed for large loans

Kim Iuck-hyun (김이억원), chairman of the Financial Services Commission, said he will reflect a range of views on property lending policy in measures to manage household debt and protect end-users. At a public forum in Seoul, experts urged differentiated rules, including limiting guaranteed jeonse loans to vulnerable households while expanding support for them. Others called for moving beyond uniform loan caps and imposing macroprudential fees on high-priced homes, multi-homeowners and large borrowers.

Finance

Korean banks tighten lending standards ahead of government property measures

South Korea\'s financial sector is raising lending hurdles ahead of a possible government property package as early as next month. Banks are tightening self-imposed rules, including reducing credit loan limits and strengthening management of overdraft facilities, even as decisions on mortgage and jeonse loan curbs remain undecided. Markets are watching possible tighter jeonse loan guarantees and renewed focus on second-tier lenders. Internet-only banks are also cutting limits as demand shifts.