NongHyup Bank reopens variable-rate mortgage window for genuine demand

NH NongHyup Bank is set to reopen its doors to new variable-rate mortgage applications, signaling a shift in lending policy after a two-month hiatus.

The bank had suspended new variable-rate mortgage loans on June 1st, a move necessitated by its rapid increase in household debt, which had briefly surpassed the growth limits agreed upon with financial authorities. To regain control, NongHyup Bank implemented stricter lending measures, including limiting mortgage credit insurance and mortgage insurance guarantees, effectively reducing the amount individuals could borrow.

These measures proved effective. As of August 18th, the bank's outstanding household debt had decreased by 0.5% in the second half of the year, with collective housing loans down 0.6% and jeonse (lump-sum deposit) loans down 1.6%. This reduction brought the bank's debt growth rate back within the acceptable range set by regulators.

The decision to resume lending comes as financial authorities have relaxed overall household debt growth targets. The Financial Services Commission recently raised the permissible annual growth rate from 1.5% to 3%, effectively increasing the lending capacity for financial institutions by approximately 30 trillion won nationwide.

NongHyup Bank stated that the resumed variable-rate mortgages will prioritize genuine demand, with a particular focus on collective housing loans. This strategic focus aims to support essential housing needs while continuing to manage overall debt levels responsibly. The exact allocation of the increased lending capacity between general mortgages and collective loans will be finalized through ongoing discussions between the bank and financial authorities.