Woori Bank will fully halt credit loans offered through lending platforms such as Toss. The bank will also stop handling loan-switching products through its banking app. Credit loan limits for high earners are set to be cut simultaneously across all banks, meaning credit loans, like mortgages, are becoming increasingly difficult to obtain.
According to financial industry sources Wednesday, Woori Bank will suspend new and loan-switching credit loans through lending platforms including Toss, KakaoPay, Naver Financial, Finda and Banksalad starting Thursday.
Woori Bank will also block loan-switching credit loans through its “WON Banking” app. KB Kookmin Bank and Shinhan Bank are reviewing credit loan management measures, such as a uniform cap of 50 million won on overdraft account limits.
The move comes as credit loans surged, with demand for “debt-fueled investment” coinciding with mortgage limit restrictions. Last month, household loans across all financial sectors increased by 9.3 trillion won from the previous month, a wider increase than the prior month’s 3.5 trillion won. Credit loans, which had fallen by 900 billion won in April, rose by 3.4 trillion won last month, leading the increase.
The Financial Services Commission (FSC) held a “household debt review meeting” Wednesday and announced it would activate an emergency household debt management system. Authorities asked banks to take various voluntary management measures, including reducing new credit loan limits for high earners and encouraging repayment by waiving early repayment fees on credit loans. The FSC said it would hold weekly review meetings for financial firms that fail to comply with household loan management targets to monitor their implementation status.
Financial authorities are also preparing additional regulations, including restrictions on speculative non-resident single-home owners and a reduction in the guarantee ratio for jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) loans. The FSC stressed, “As properties released following the end of the capital gains tax surcharge moratorium for multiple-home owners on May 9 are absorbed by the market, there is a possibility that mortgages could expand again. Since credit loan volatility may also continue to grow, we ask all financial sectors to maintain serious vigilance and conduct preemptive, voluntary management of household loans.”