FSC chair reiterates goal of curbing household debt, staying the course on loan limits

Economy

FSC chair reiterates goal of curbing household debt, staying the course on loan limits

Published: 06 Sep. 2024, 16:59

SHIN HA-NEE
shin.hanee@joongang.co.kr

Financial Services Commission Chairman Kim Byoung-hwan speaks during a press briefing held at the government complex in central Seoul on Friday. [JOINT PRESS CORPS]

The financial authorities reaffirmed their commitment to curbing household debt growth on Friday, following controversies over mixed signals about ongoing loan-tightening.

"The consistent stance of the government is that the goal is to achieve fiscal stability by pushing the household debt-to-GDP ratio downward,” Financial Services Commission (FSC) Chairman Kim Byoung-hwan told the press at the government complex in central Seoul on Friday.

"If the property market continues to grow even more heated and household debt keeps surging, the government will boldly implement additional measures,” said Lee.

The emergency press briefing followed a senior official meeting among four economic policy chiefs in the country — Kim along with Minister of Economy and Finance Choi Sang-mok, Bank of Korea Gov. Rhee Chang-yong and Financial Supervisory Service (FSS) Gov. Lee Bok-hyun — earlier in the day.

The meeting came amid rising controversies over the FSS governor’s recent comments, which were interpreted as signals for a potential easing of loan regulations.

Lee said on Wednesday, “We will review policy measures related to loans that may cause damage to those seeking to buy a home for personal use,” as opposed to those whose primary purpose is investment. The comment came after banks began to significantly tighten loans for housing transactions, even suspending the issuance of loans for homeowners.

Amid rising confusion over whether the financial authorities would reverse course on the recent tightening of loan regulations, the FSC chairman stressed that reining in the growth of household debt remains the utmost priority for the government.

“If we do not curb the growth in household debt now, real estate prices will rise, which would ultimately harm regular households and non-homeowners,” said Kim, adding that “now is the time to actively manage the household debt situation.”

In August, household loans and mortgage loans surged at a record pace due to growing housing prices and a steep increase in demand ahead of the implementation of a stricter loan regulation in September. The combined outstanding balance of household loans at the five commercial banks grew 9.6 trillion won ($7.2 billion) from a month prior to 725.4 trillion won in August, the steepest increase ever recorded.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]