April 25, 2024
Finance
Banks on high alert as gov’t tightens mortgage loan rules
[THE INVESTOR] Local banks are on alert as the government tightens the screw on mortgage loans, financial industry insiders said Monday.
The Moon Jae-in administration took a series of steps since taking office in May to tame real estate speculation. It also sent a message to the banks against raising the spread of outstanding loans, telling bank chiefs last week not to do so without due reason, pre-empting them as the central bank is hinting at a possible rate hike.
Mortgage loans make up a large part of business by commercial banks. According to the Financial Statistics Information System operated by the Financial Supervisory Service, the proportion of home-backed lending by six commercial banks averaged at 40 percent last year, up from 35 percent in 2011 as the real estate market flourished.
At Woori Bank, the rate was 42.01 percent according to its third-quarter earnings report. For Kookmin Bank, it was 41.96 percent.
Insiders say when the effects of government measures start to kick in, the banks‘ lending will fall, which will bring down their profit from interest earnings.
The banks also have to worry about the government raising the bar for the capital adequacy ratio for mortgage loans, they said.
By Alex Lee and newswires (alexlee@heraldcorp,com)
