IBK Industrial Bank of Korea has suspended new variable-rate mortgage lending at branches nationwide. As the lending "shutdown" spreads across the board, anxiety is mounting among genuine homebuyers and people in their 20s and 30s.
According to financial industry sources on the 22nd, IBK halted new variable-rate mortgage lending through its branches starting the previous day. For the time being, only fixed-rate mortgages are available at branches. However, to prevent confusion among borrowers, applications and consultations processed through the 20th will continue to be accepted until the 30th of this month.
IBK's variable-rate (three-month) mortgage rate stands at 4.135% to 5.035% per year. The variable-rate (six-month) mortgage rates at KB Kookmin Bank and Shinhan Bank are 4.17% to 5.57% and 4.11% to 5.51%, respectively.
IBK moved to suspend new variable-rate mortgage lending due to total volume regulations. As of the 15th, the increase in household loans at the five major banks reached 4.68 trillion won, exceeding the annual target of 4.33 trillion won. IBK is also reportedly barely meeting its volume target.
With IBK, a state-run bank, now clamping down on mortgages following commercial banks, the lending freeze in the second half of the year is expected to worsen. After KB Kookmin Bank uniformly capped mortgage limits at 300 million won, Woori Bank cut its monthly lending limit per branch from 3 billion won to 1 billion won. SC First Bank, considered the last line of defense in the banking sector, has also suspended new mortgage applications. Even insurance companies are shortening the mortgage application period from 90 days before the balance payment date to 60 days.
The Financial Services Commission (FSC) plans to decide whether to ease lending regulations based on opinions gathered at the real estate roundtable hosted by President Lee Jae-myung on the 23rd, but the market assesses that its room to maneuver is limited. A researcher at a state-run research institute said, "The financial authorities appear to have real estate market price stability in mind as their ultimate goal," adding, "Lending regulations can buy time until the fundamental problem of expanding supply is resolved, but there are limits to curbing home price increases."
The market is flooding with criticism that the authorities' total volume regulations are excessive. A financial industry official expressed concern, saying, "Clamping down on lending to rein in the real estate market is nothing more than administrative expediency," and "it will only push home prices higher later."
