74864
Total borrowing amounted to $1.23 trillion as of the Q2  this year, up 10.4% from a year earlier.
Total borrowing amounted to $1.23 trillion as of the Q2  this year, up 10.4% from a year earlier.

South Korea Plans to Tighten Mortgage Rules

South Korea Plans to Tighten Mortgage Rules

South Korea will impose fresh mortgage curbs for owners of multiple homes to put a brake on binge borrowing, amid concerns a build-up in household debt could leave the economy exposed to a crash, the government said on Tuesday.
Starting 2018, borrowers applying for mortgages on second homes will see tightened loan limits, with lenders required to include principal balance of the borrowers’ existing debt in measuring their credit worthiness for new loans, Reuters reported.
Currently, debt repayment is limited to 40% of home buyers’ annual income in Seoul and its outskirts, and banks’ measure of debt obligations only include interest payments and not the principal balance.
The new rules will aim to better assess borrowers’ debt obligations from the first home to prevent binge borrowing, at a time when the nation’s household debt is expanding at a double-digit pace and crimping private consumption.
“Excessive household debt expansion leads to increasing debt repayment burdens and restrains private consumption and economic growth,” the finance ministry and regulator said in a joint statement.
The sum of home loans, credit purchases and other household borrowing totaled 1,388.3 trillion won ($1.23 trillion) as of the second quarter this year, up 10.4% from a year earlier.
The new rules follow the Bank of Korea’s policy meeting last week, at which it held interest rates at a record low but at which a dissenting board member called for a rate hike amid a stronger outlook for growth. The dissenting vote prompted some economists to bring forward the timing of a rate hike at the Bank of Korea to the Nov. 30 meeting.
As of the end of 2016, South Korea’s household debt-to-gross domestic product stood at 95.6%, above the average of 70% for the members of the Organization for Economic Cooperation and Development.
High-speed household debt growth is a concern especially as economists expect the Bank of Korea to increase policy rates in the coming months, which may raise debt repayment burdens for vulnerable homes.
Twelve out of 20 economists polled by Reuters on Oct. 17 saw the BoK hiking key interest rates during the first half of 2018, ending an easing cycle that began in 2011.
As the International Monetary Fund saw the country’s household debt situation as “manageable”, the government reiterated the economy can sufficiently manage the debt.
Of the 1,400 trillion won debt, 320,000 households with 92 trillion won debt are facing difficulties in paying back the money they owe to banks and mutual savings banks. This is because they have a negative cash flow, meaning their monthly paychecks are not enough to meet their debt obligations.

Short URL : https://goo.gl/2wFrwZ
  1. https://goo.gl/6vRNHh
  • https://goo.gl/GfNkyq
  • https://goo.gl/YhdAoV
  • https://goo.gl/WXPQYs
  • https://goo.gl/a346st

You can also read ...

ADB Forecasts India Growth at 7.3 Percent
The Asian Development Bank expects India’s growth to pick up...
Dow futures dropped more than 100 points in early trading, as traders returned from the long holiday  weekend to face fresh selling pressure for US stocks.
A six-day rebound in world stocks began to splutter on Tuesday...
Ghana Told to Cut High Agro Imports
The World Bank country director for Ghana, Henry Kerali, has...
Chinese ironworks are increasingly  using Australian ore, which has  a high iron content.
Global stock markets are down from their recent peaks and...
London-based Capital Economics expects the German economy to expand by 2.7% this year. This would be above the government’s  more conservative forecast of 2.4%.
The German economy is expected to improve in the next six...
Indonesia Criticizes Trump’s Protectionist Policies
Indonesia is foregoing billions of dollars on offer from...
Goldman Raises Red Flag Over US Gov’t Spending
US fiscal policy is headed for “uncharted territory.” That’s...
File picture of truckers in Buenos Aires during a demonstration last summer against the policies of Mauricio Macri.
The Argentine economy grew “close to 2.8%” last year, Guido...

Add new comment

Read our comment policy before posting your viewpoints

Trending

Googleplus