"Banks say lending has increased, but individual mortgage loans are still hard to get"... Five Major Commercial Banks expected to raise household lending targets by 60%

[Financial News] Despite the financial authorities' easing of household lending volume regulations, the room for major commercial banks to supply additional loans has effectively run out. While banks have sharply expanded lending by applying volume exemptions to group loans, the barriers remain high for individual mortgage loans and credit loans, leaving end-users still lining up for loans.
According to the banking sector on the 30th, discussions are under way to raise this year's household lending growth target for the Five Major Commercial Banks (KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank and Nonghyup Bank) to around 60%. The total target tentatively allocated by the financial authorities is reportedly still being fine-tuned through detailed consultations.
Previously, household loan balances could rise by only about 434 billion won a year, but if the cap is expanded to 60%, the increase would be possible up to about 698 billion won. That means the combined target for the Five Major Commercial Banks would rise by roughly 264 billion won. Some items, including group loans, are excluded when calculating volume management performance.
The move follows the financial authorities' decision on the 13th to raise banks' annual household lending growth management target from 1.5% to 3.0%. By bank, the growth rate target was lifted by 0.3 to 0.4 percentage points, from around 0.6 to 0.7% at the end of last year to 1.0 to 1.1%.
In the process, some banks that had already exceeded their previous targets were said to have received penalties, resulting in relatively smaller additional quotas.
However, given the cumulative increase in household lending so far, the additional room banks can actually use is limited. As of the 27th, household loan balances at the Five Major Commercial Banks, excluding policy-backed loans, stood at 651.6377 trillion won, up 6.6677 trillion won from the end of last year at 644.97 trillion won. Compared with the newly set growth target of 6.98 trillion won, only about 31.23 billion won remains.
The banking sector says that even with some items such as group loans excluded from volume management performance, there is not much money left to allocate to individual mortgage loans or credit loans.
Another issue is that the benefits of the eased rules are concentrated in group loans, leaving the additional room for ordinary household lending below market expectations. During talks with banks on new targets, the authorities reportedly decided to exclude 100% of net group-loan increases after August from each bank's allocated volume cap. They also agreed to exclude 70% of net increases in credit loans for mid- and low-credit borrowers after August, as well as a certain share of net increases in jeonse loans backed by the youth preferential jeonse loan guarantee, which will take effect in October.
As a result, banks are rapidly expanding supply, especially for final-payment loans at large apartment complexes. Last week, the Five Major Commercial Banks also sharply raised the final-payment loan limit for THE H Bangbae in Seocho-gu, Seoul, which is set for move-in next month, from 500 billion won to 1.55 trillion won.
By contrast, customers looking to buy existing homes or needing overdraft loans or ordinary credit loans are still subject to the same strict management standards, deepening concerns over fairness across loan types. An employee at a major commercial bank branch said, "Cases are still occurring where end-users who need funds cannot get loans when they need them."
This month's rise in household lending was also led by mortgage loans, including group loans. As of the 27th, total household lending at the Five Major Commercial Banks, including policy-backed loans, stood at 781.4377 trillion won, up 2.4586 trillion won from the end of last month.
Over the same period, mortgage loan balances rose by 2.4761 trillion won, from 617.9411 trillion won to 620.4172 trillion won. Group loans in particular increased by 1.0525 trillion won to 149.2951 trillion won, marking the largest gain since September 2024.
By contrast, credit loan balances fell by 21.8 billion won, from 109.7533 trillion won to 109.7315 trillion won. The decline is attributed to weaker demand for loans used for stock investment and to banks' conservative management of credit loan and overdraft limits.
[email protected] Lee Hyun-jung Reporter