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As the high intensity regulation of the housing market continues, real estate mortgage lending in the second financial sector is increasing rapidly. Although the growth of bank mortgage loans has slowed, the demand for loans has not diminished, causing a “balloon effect”. It is noted that since the market interest rate is also increasing, the burden of household debt only increases for ordinary people who have been trying to find a home.
◆ Banks are stuck, so go to insurance and savings companies.
According to the Financial Supervision Service and the People’s Power Office, Yoon Chang-hyun, on the 11th, the increase in real estate mortgage loans (including housing and non-real estate) in the two financial sectors, including insurance companies, mutual finance, and savings banks, from the second half of last year to the beginning of this year is increasing. Just last month, 1.3 trillion won increased compared to the previous month. The increase has increased after last December (400 billion won) and January of this year (900 billion won). In 2019 and February of last year, they decreased by 1.4 trillion won and 900 billion won, respectively, compared to the previous year. With this in mind, the industry says this year is an unusually high increase.
This is a different way than the trend of the main conversations with the first financial sector. The rise in mortgage loans (excluding whole household loans) for the entire banking sector has slowed since the end of last year. In November and December, the increase was 3.9 trillion won and 3.5 trillion won, respectively, compared to the previous month, but in January it was only 2.6 trillion won.
It is an analysis that since last year, real estate loans in the second financial sector have increased remarkably. According to data presented by the Financial Supervision Service in Assemblyman Yoon Chang-hyun’s office, real estate mortgage loans handled by all insurers as of last November amounted to 89 trillion won. It exceeded the loan amount (79.8 billion won) during the past year. As of the end of 2018, it reached 7.6 trillion won, but it has risen sharply from last year. Home equity loans from financial mutuals such as credit unions, nonghyups, suhyups, and forest cooperatives also increased 10%, from 315 trillion won at the end of 2019 to 349 trillion won at the end of last year. During the same period, home equity loans from savings banks also increased from 22.3 trillion won to 25.7 trillion won.
◆ Interest rates go up more … What about the household burden?
It is analyzed that this is because the end users of the purchase of houses are directed to the second financial sector ‘crying and eating mustard’. This is because it is difficult for banks to raise all the funds for your homes as loan regulations tighten. The main reason is that the upper limit of the mortgage ratio (LTV) that applies when borrowing from banks has been lowered. In overheated areas and areas subject to adjustment, loans are only available up to 20-40% of the home price. In addition, the government has raised the threshold of loan regulations to avoid “spiritual” style (attracting souls) loans. The major banks have drastically lowered their credit limit and lowered interest rates.
The growing concern is that if interest rates rise, the burden on households that receive second-sector loans could increase. Interest rates in the domestic market are impacting as US Treasury yields rise due to the development of the corona vaccine and anticipation of an economic recovery. According to data released by the Bank of Korea on 26 last month, the interest rate on home loans based on the amount of the bank’s new treatment in January was 2.83% per annum, 0.04 percentage points. more than the previous month. It has increased for 5 consecutive months. In the same month, Judamdae’s interest rate also increased by 0.04% to 2.63% per year. It is the largest increase since November 2019.
Depending on the industry, there is a high possibility that if the interest rate in the first financial sector increases, the interest rate in the second and third financial sectors will also increase in a stepwise fashion. A financial sector official said: “If you receive a real estate mortgage loan from the second financial sector because there is no loan, the high interest rate will apply and the interest charge will already be high. In the future, the risk of household indebtedness may be much higher than now, “he said.
Some point out that loan regulations are only increasing the interest burden without suppressing the demand for home purchases. Representative Yoon Chang-hyun said, “We cannot regulate the minds of consumers who want to build homes for better living conditions.” Regulations must be relaxed, “he said.
Reporter Jeong So-ram / Park Jong-seo [email protected]
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