Banks ease mortgage lending as regulators relax debt caps; individual loan rules to stay

South Korean banks are beginning to ease restrictions on mortgage lending following the financial authorities' decision to relax regulations on the total amount of household debt. This move signals a potential increase in housing-related loans, offering some relief to the market.

NH Nonghyup Bank, for instance, will resume sales of its variable-rate mortgage product starting next week. This decision comes after the bank had previously halted such offerings due to its annual household loan limit. The government's announcement to ease the total amount regulation for household loans, as part of its August 13 real estate measures, has prompted this change.

While banks are expected to gradually increase their lending activities, the primary focus will be on collective loans, such as those for move-in and balance payments. This means that individual loan restrictions are likely to persist, indicating a nuanced approach to managing household debt. Financial authorities are discussing the distribution of the increased household loan quota with major commercial banks, reflecting an effort to manage the impact of the policy shift.