The chief financial regulator said Thursday that tackling household debts would take priority in government policies next year, along with economic reform to improve the fundamentals of the economy and sharpen competitiveness.

“Restructuring of household debt is a top priority for financial stability in 2015,” Financial Services Commission chairman Shin Je-yoon said in a New Year’s message.

“We’ve set 2015 policy guidelines in order to improve the quality of household debts.”

South Korea’s family loans pierced the 1,000 trillion won ($905 billion) mark for the first time in the third quarter of last year, as the Seoul government softened loan-related regulations in August to give a boost to the long-protracted real estate market.

Experts note that mounting household debts is the biggest threat to Asia’s fourth-largest economy, which is highly dependent on exports, as an external factor, such as a rate hike in the United States, could drive the whole country into a financial crisis.

Shin said the FSC would have commercial banks go through self-restructuring and draw up solid mortgage loan programs to prevent possible insolvencies, and help lenders move to longer-term loans with lower interest rates. (Yonhap)