Despite a 60% Increase in Household Lending Targets at the Five Major Banks, 'Open Runs' Continue

[Financial News] Financial authorities have partially eased banks' overall household lending limits, significantly increasing the annual lending capacity of the five major banks.
However, since the amount of lending growth has already come close to the new target and the easing measures are concentrated on group loans, the lending barrier remains high for borrowers seeking regular mortgage loans and credit loans.
According to the financial sector on the 30th, the household lending growth target for this year at the five major banks, including KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank and Nonghyup Bank, was raised from 434 billion won to about 698 billion won. That is an increase of 264 billion won from the previous target, or roughly 60%.
The problem is the actual increase. As of the 27th, the five major banks' household lending balance, excluding policy-backed loans, stood at 651.6377 trillion won, up 6.6677 trillion won from the end of last year. The gap from the new target is only about 300 billion won, leaving little room for additional lending.
The key point of this regulatory easing is that group loans needed for new apartment sales and move-ins have effectively been granted a broad exception. It was reported that from August onward, net increases in group loans are being excluded 100% from total lending management.
Credit loans for middle- and low-credit borrowers, as well as special jeonse loans for young people, are also partially excluded from the total limit.
By contrast, loans for final payments on existing apartment purchases, regular mortgage loans and overdraft-style credit lines are still subject to strict controls. As a result, borrowers who actually need funds say they can hardly feel any easing in lending rules.
Banks are also raising concerns that concentrating loans in the new housing market could create fairness issues with the existing housing market.
Mortgage lending is driving the overall increase in loans. As of August 27, the five major banks' total household lending balance stood at 781.4377 trillion won, up 2.4586 trillion won from the end of July.
Mortgage loans rose by 2.4761 trillion won in a month to 620.4172 trillion won, accounting for nearly all of the increase. In particular, group loans jumped by 1.0525 trillion won, marking the largest increase since September 2024.
By contrast, credit loans fell by 21.8 billion won to 109.7315 trillion won. Demand for borrowing to invest in stocks and other assets has cooled, pushing credit loans back into decline for the first time in four months.
Some lending rates have also fallen. As of the 28th, the five major banks' mixed-rate mortgage loans were offered at 4.68% to 7.15% per year, with the upper end down 0.35 percentage point from a month earlier.
This reflects movements in market rates, separate from the Bank of Korea's base rate policy. Still, some expect variable-rate mortgages and credit loan rates to rise further.
In the end, this regulatory easing did not fully open the door to the household lending market. Supply has increased in specific areas such as group loans, but lending conditions for ordinary borrowers remain tight.

[email protected] Kang Jung-mo Reporter