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South Korea to Tighten Home Loan Screening

South Korea to Tighten Home Loan ScreeningSouth Korea to Tighten Home Loan Screening

South Korea’s top financial regulator on Tuesday urged banks to tighten their screening of home loan applications to help slow the growth of household debt, Yonhap reported. South Korea tightened lending rules for mortgages last month, but critics say loopholes give some people room for borrowing money in excess of the lending limits to buy homes. Kim Yong-beom, vice chairman of the Financial Services Commission, told representatives from banks that the growth of household debt could pick up during the second half of the year, citing a rise in sales of new homes. Kim called for banks to apply “pre-emptive management” by strictly screening applications for home loans. Household debt stood at 1,388.3 trillion won ($1.23 trillion) at the end of June, up 10.4% from a year earlier, according to the Bank of Korea. Household debt is estimated to exceed 1,400 trillion won this month, given that household debt rose by about 18 trillion won in July and August.

 

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