Kookmin Bank Follows Hana Bank in Suspending New Mortgage loans, year-end ‘Loan Cold Wave’ Becomes a Reality
Banks are increasingly restricting loan applications as they approach thier annual lending limits, spurred by regulations from financial authorities aimed at managing total household debt. KB Kookmin Bank has joined Hana Bank in temporarily halting new mortgage loans for home purchases this year.
Kookmin Bank announced on November 21st it will cease accepting mortgage loan applications until the end of the year. The restrictions will take effect on November 24th for face-to-face applications and November 22nd for non-face-to-face applications. The bank will also suspend applications for ‘othre bank refinance loans’ (covering home mortgages, lease financing, and credit loans transferring from other banks) and ‘KB Star Credit Loan,’ its non-face-to-face credit loan product, starting November 22nd.
A Kookmin Bank official stated the move is to meet the bank’s target for total household loans this year, while clarifying that applications for loans utilizing financial stability funds and loans intended for implementation next year will still be accepted.
Hana bank previously announced a temporary suspension of face-to-face applications for home and jeonse (lease) loans starting November 25th. Non-face-to-face jeonse loan applications have been unavailable since the end of October, though non-face-to-face consultations remain open.
These actions are a direct result of the financial authorities’ June 27th lending regulations – the first issued under the Lee Jae-myung administration. These regulations mandated a 50% reduction in the total amount of financial sector loans for the second half of 2023 (July to December), decreasing the allowable increase in household loans for banks from 7.2 trillion won to 3.6 trillion won.
Other banks are also expected to follow suit, implementing their own measures to manage total loan volume. The five major banks – KB Kookmin, shinhan, Hana, Woori, and NH Nonghyup – are already limiting new loan applications through channels like loan originators, mortgage credit insurance (MCI), and mortgage credit guarantee (MCG). Woori Bank has capped household loan handling at each branch to 1 billion won per month.
The tightening of loan availability presents challenges for prospective homebuyers. A real estate agent in Guro-gu,Seoul,noted clients are attempting to schedule moves for early next year and are exploring choice financing options like deposit-secured loans and insurance policy loans.
A banking industry official explained that while year-end loan adjustments are common, this year’s limits were reached more quickly due to the halved target for the second half of the year. They anticipate continued difficulty in securing mortgage loans in the near future, citing ongoing policies aimed at stabilizing real estate prices.
