Published : Aug. 18, 2021 - 19:58
Koh Seung-beom, the nominee for the Financial Service Commission, speaks to reporters at the Korea Deposit Insurance Corporation in Seoul on August 6. (Yonhap)
South Korea plans to unveil additional measures to curb a sustained increase in household debt, if needed, by mobilizing all available policy means, the nominee for the financial regulator has said.
Koh Seung-beom, the nominee for the Financial Service Commission, told officials Tuesday that he will "swiftly" push for "strong" measures to tackle household debt if his nomination is confirmed by parliament, according to the FSC.
"It is very urgent to get rid of macroeconomic risks stemming from household debt," Koh was quoted as saying by the regulator.
Households' high indebtedness has been cited as the main bugbear for the South Korean economy.
The country's household credit reached a record 1,765 trillion won ($1.5 trillion) as of end-March, up 9.5 percent from a year earlier, according to central bank data.
The growth has shown no signs of letup as more people have taken out loans to buy homes amid skyrocketing housing prices.
Demand for unsecured loans also remains high amid a boom in stock investments.
In April, the FSC unveiled a set of measures to slow the growth of household debt by expanding tougher rules to more borrowers of home-backed lending.
In 2020, household debt grew 7.9 percent on-year. The regulator aims to bring the annual increase to below 6 percent this year and below 5 percent next year.
Since July, the FSC has applied stricter lending calculation for mortgage loans, called the debt service ratio (DSR), in a bid to curb household debt.
The DSR measures how much a borrower has to pay in principal and interest payments in proportion to his or her yearly income.
Since last month, a borrower is required to repay 40 percent of annual income if he or she buys a home worth more than 600 million won in designated speculative areas. Until July 2023, the rule will be gradually applied to more borrowers. (Yonhap)