"Can't Get a Mortgage Loan?" The Five Major Commercial Banks Exhaust Household-Lending Growth Capacity in Just One Month... Concerns Grow Over a 'Year-End Loan Cliff'

[Financial News] The five major commercial banks exhausted all of their additional lending capacity just one month after expanding their annual household-loan growth target. As a result, household-loan requirements across the banking sector could remain stringent through the end of the year.
According to the financial sector on the 22nd, the household-loan balance at the five banks—KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank, and Nonghyup Bank—stood at 652.2617 trillion won as of the 17th, excluding policy loans. This represented an increase of about 7.29 trillion won from 644.9700 trillion won at the end of last year.
That figure was about 180 billion won higher than the five banks' revised annual household-loan growth target of approximately 7.11 trillion won, which had been reset in consultation with the financial authorities. After the annual household-loan growth target was raised, the five banks gained about 2.78 trillion won in additional lending capacity, but exhausted it all in just one month.
By bank, two of the five had already substantially exceeded their annual growth targets, while two others were reportedly close to reaching theirs. As each bank's lending capacity rapidly declines, the banks are increasingly likely to continue managing total lending through monthly limits until the end of the year.
The financial authorities previously doubled the banking sector's household-loan growth target for this year, raising it from 1.5% to 3.0%.
The banks also partially reopened loan applications after having suspended them, easing their lending restrictions. Starting this month, Hana Bank resumed accepting applications through loan recruiters for mortgage and jeonse loans scheduled for disbursement in November. Industrial Bank of Korea resumed accepting applications through loan recruiters on the 15th, while separately managing its monthly application limit.
However, lending limits are being exhausted so quickly that applications are sometimes opened and then closed almost immediately. Shinhan Bank closed applications for household loans through loan recruiters at 5 p.m. on the 2nd, just one day after resuming them on the 1st of this month. The lending limit allocated for September was exhausted in two days. Shinhan Bank manages new household loans arranged through loan recruiters on a monthly basis and plans to resume accepting applications on the first day of the following month.
A banking-sector official said, "Even if relocation-expense, interim-payment, and balance-payment loans are excluded from aggregate lending management, there are no signs that the pace of household-loan growth is slowing. Banks have typically tightened household-loan management toward the end of the year as their annual lending limits are filled. This year, too, with demand from people moving concentrated, a substantial portion of the limit has already been used, leaving limited lending capacity."
However, including policy loans, the total household-loan balance at the five banks stood at 781.0582 trillion won as of the 17th, down 611 billion won from 782.1192 trillion won at the end of last month. This was the first decline in the total household-loan balance in six months, since March.
[email protected] Lee Hyun-jung Reporter