Household loan capacity increased by 30 trillion KRW, but…Hana Securities “The impact on general housing loans is limited”

South Korea's household loan supply has expanded by about 30 trillion won this year, but the impact on regular housing mortgage loans is expected to be limited, according to analysts. Most of the increased lending capacity is likely to be used for mortgage refinancing, medium-term loans, or savings, according to a report from Han One Securities Research Institute.

The report stated that the expansion of loan amounts is intended to address the supply shortages for mortgage refinancing, medium-term loans, and savings, rather than regular housing loans. The Financial Committee has also announced plans to prioritize collective loans over regular loans. The total supply increase of 30 trillion won will be divided into regular loans, policy loans, and the reserve portion, which will not be distributed to banks for emergency use.

The proportion of each category is yet to be determined. The report also noted that the impact of the higher capital regulation on regular housing loans is expected to be minor. The committee plans to raise key risk metrics such as loan-to-value ratio, loan-to-repayment ratio, and loan amount thresholds for high-risk housing loans starting in January of next year.

These metrics will determine the capital adequacy ratio that banks must maintain. While a higher capital ratio may pose additional burdens for banks, Han One Securities' research suggests that the impact will not be significant.