FSS orders DTI, LTV ratios held despite huge household debt

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FSS orders DTI, LTV ratios held despite huge household debt

Published: 28 Jul. 2015, 21:12

The Financial Supervisory Service said it has ordered local banks to maintain the current level of debt-to-income (DTI) and loan-to-value (LTV) ratios on mortgages until August 2016, following the Ministry of Strategy and Finance’s announcement that the ratios would be kept untouched despite the snowballing household debt.

The FSS said on its homepage Tuesday that it has completed legal procedures to keep the current DTI and LTV ratios, which were relaxed in August 2014 as part of the Finance Minister Choi Kyung-hwan’s efforts to boost the real estate market.

Currently, the nationwide DTI ratio is up to 70 percent. The DTI for real estate in Seoul and Gyeonggi is set to 60 percent.

The FSS said the regulators will strengthen other income standards when issuing loans, such as credit card spending, to tackle the surging household debt that has reached nearly 1,100 trillion won ($944 billion).