The reason for the sudden suspension of real estate loans.

Wait for 100m for a loan consultation. 

Recently, when the bank announced that it would stop lending real estate, many people call the bank for counseling.

I've sorted out what the hell is going on.

 

What's going on?

A growing number of banks are suspending loans. It started with NH Nonghyup Bank. 

In short:

NH Nonghyup Bank: Bank announced by the end of November this year that it would suspend all kinds of mortgage loans, including housing and land. You can't take out new loans, increase the number of loans, or renew your loan commitment.

Woori Bank: Bank decided to stop the "Woori lease loan," one of the charter products, until the end of September. However, young people can continue to receive supporting loans.

SC First Bank: Bank suspended some mortgage loans for the time being.

 

Many people are worried that other banks might stop lending, but the government said there is no possibility. That other banks still have enough to lend more money. NH Nonghyup Bank, which stopped lending this time, has exceeded the government's set limit.

 

The government set the limit? What's that?

The government sets the bank's household loan growth rate every year and prevents it from exceeding that.

For example, if set at 5%, banks should manage their loans to households for one year not to increase by more than 5 percent from the previous year (= Household Loan Total Regulation). 

The rate varies slightly depending on whether it's a bank or a savings bank.

Last year, we stopped the regulation when the economy became difficult due to Covid-19, but we decided to apply it again this year as loans increased too much in the second half of the year. 

Starting with the first financial sector(bank), the second financial sector (such as savings banks and credit card companies) will also be regulated.

 

Why are you regulating it?

The government is trying to stop the debt from increasing too much in advance. Of course, the overall size of loans is essential, but the speed of growth is more important to regulate the growth rate. 

Compared to other countries, our country is increasing very fast. 

 

What happens when the loan grows too fast is:

Consumer and Economic Growth: Too much debt and interest burden can reduce consumption. The economy works well when people spend money, which can harm the economy.

Risk of insolvency: Increasing the number of people who can't pay off their loans puts a heavy burden on the economy and banks. Lenders are also burdened by changes in Interest rates rise or the economy deteriorates.

Asset market bubble: It turns out that people with high incomes or good credit account for two-thirds of household loans. There are rumors that quite a few people must have taken out loans, not for lack of living expenses but investment in real estate and stocks. Interest rates were so low that interest burdens were reduced, and investment fever was hot. With so many loans increasing, the bubble in the real estate market could cause an economic crisis.

 

What are the people saying?

People who are about to sign a lease or try to get a loan to buy a house are unhappy:

"Government regulations are too much!" Some say that more people may want to take out loans in advance even if they don't need them now. Some point out that if loans become difficult at banks, there will be a phenomenon (=Balloon effect) in which loans are drawn to other sides, such as P2P loans, so we have to wait and see.

 

Does the bank only stop lending real estate?

It's said that the amount of money you can get through credit will also decrease.

The government recently ordered the bank to lower the limit of credit loans to receive up from twice the annual salary to the annual salary level. 

The government is also preparing to tighten DSR regulations, so it will be hard to get a loan by the end of the year.