This year's household loan threshold in the third quarter is expected to be significantly lower than in the second quarter. This is due to the government's implementation of stringent regulations, including lowering the limit on mortgage loans to 600 million won starting from the 28th of last month.
According to the 'Results of the Financial Institution Loan Behavior Survey' announced by the Bank of Korea on the 15th, the comprehensive loan attitude index for banks in the third quarter is -17, down 4 points from the previous quarter (-13).
In this survey, the Bank of Korea averages the bank loan attitudes, loan demand, and credit risk assessments (greatly eased/increased - somewhat eased/increased - no change - somewhat tightened/decreased - greatly tightened/decreased) to produce an index between 100 and -100. If the index is positive (+), it indicates that the number of financial institutions that selected 'eased (loan attitude)' or 'increased (credit risk, loan demand)' is greater than those that indicated 'tightened' or 'decreased'. Conversely, if it is negative (-), the opposite is true.
When divided by the lender, especially the attitude index for household mortgage loans and household general loans (such as credit loans) are -31 and -22, respectively, indicating a clear strengthening of loan attitudes compared to the previous quarter (-11, -11). A Bank of Korea official noted, 'The stress debt service ratio (DSR) phase 3 has been implemented since July, and the additional strengthening measures for household debt management have had an impact.'
Earlier, the government announced on the 27th of last month that it would lower the limit on mortgage loans to 600 million won and implement loan regulations, including imposing residency obligations on mortgage loans for purchasing dwellings.
In contrast, the loan attitude towards corporations has somewhat eased. The loan attitude indices for large corporations and small and medium-sized enterprises were 6 and -6, respectively, marking increases of 12 points and 8 points from the previous quarter (-6, -14).
Among the loan subjects, small and medium-sized enterprises had the highest credit risk index. The estimated credit risk index for small and medium-sized enterprises in the third quarter was 19. However, this is a decrease of 6 points compared to the previous quarter (25).
It was observed that credit risk would also ease in sectors such as large corporations (11 to 8) and households (25 to 14). However, the Bank of Korea stated, 'Credit risk for corporations in the third quarter is expected to increase, particularly among small and medium-sized enterprises, due to ongoing economic uncertainty and concerns over declining profitability.' It also conveyed that 'credit risk for households is likely to remain a concern due to the low growth rate of the real economy and worries about the repayment abilities of vulnerable borrowers.'
In the case of non-bank financial institutions such as savings banks, this survey generally expected the trend of strengthened loan attitudes to continue in the third quarter, with credit risk remaining at a high level.
Meanwhile, this survey involved a total of 203 credit managers from financial institutions last month, including 18 domestic banks, 26 mutual savings banks, 7 credit card companies, 10 life insurance companies, and 142 mutual finance associations.