"Open up group loans for Apartels, too"...FSC considers excluding them from household-loan quota management

[Financial News] Financial authorities are considering separately managing loans for residential officetels, commonly known as "Apartels," outside the banking sector’s household-loan quota management regulations. The move follows industry concerns that housing supply is being hampered because group loans for residential officetels are not as readily available as those for apartments.
According to financial-sector sources on the 13th, the Financial Services Commission (FSC) is reviewing a plan to exclude group loans for residential officetels from financial companies’ household-loan quota management targets. In the comprehensive financial measures for stabilizing the real estate market announced on August 13, the government said it would expand housing-supply financing by excluding housing-related group loans from financial companies’ household-loan quota management targets. However, officetels, which are classified as quasi-housing under the Housing Act, were not mentioned.
At a recent household-debt review meeting chaired by the FSC, participants reportedly called for group loans for officetels to be excluded from financial companies’ household-loan quota management targets because they have been left in a regulatory blind spot. The proposal came particularly from the non-bank financial sector, led by mutual finance institutions.
Mutual finance institutions failed to properly manage household loans last year, leaving them with room to increase lending this year by only 0% to 1% from the previous year. Although they received additional limits after the FSC recently expanded household-loan quota targets, the increase remains small. With virtually no room to expand household lending, they are being outcompeted by banks in apartment-centered group loans. Their aim is therefore to expand group loans for residential officetels and pursue growth.
Financial authorities plan to convene household-loan officials from the five major banks—KB Kookmin Bank, Shinhan Bank, Bank of Hope, Woori Bank and Nonghyup Bank—for a working-level household-debt review meeting on the 15th. Authorities believe the likelihood of increased borrowing is high as demand for autumn moves rises with the start of the second semester and overlaps with demand for funds during the Chuseok holiday. They plan to examine each financial company’s compliance with its newly established quota-management target.
Discussions are also expected to gain momentum on long-term fixed-rate mortgages whose rates change every 10 years, aimed at minimizing borrowers’ exposure to interest-rate fluctuations during periods of rising rates.
A financial authority official said, "The reason group loans for housing were made available was ultimately to promote apartment supply. Residential officetels are fundamentally the same in that they are places where people live." The official added, "We have heard from the industry that interim-payment loans for officetels are not being provided smoothly, so we plan to look into the issue."
[email protected] Moon-soo Park Reporter