Phase 2 stress DSR maintained for regional home loans

Greater Seoul and other loans to move to Phase 3 at 100%

The Korea Federation of Banks building in Jung-gu, Seoul. [Korea Federation of Banks]
The Korea Federation of Banks building in Jung-gu, Seoul. [Korea Federation of Banks]

Stress debt service ratio regulations on home-backed loans in non-metropolitan areas — excluding designated regulated zones — will remain at the current Phase 2 level in the second half of this year. While mortgage loans in Greater Seoul and regulated zones, along with unsecured and other loans, will move to Phase 3 as scheduled, regional home loans will continue under the existing, more lenient standards to ease the burden on genuine end-users.

The Korea Federation of Banks on Monday announced its "Stress DSR Operating Plan for the Second Half of 2026," following the Financial Services Commission's revised administrative guidance on stress DSR rules. The plan runs from July 1 through Dec. 31.

Under the plan, mortgage loans in Greater Seoul and regulated zones will carry a base application rate of 100% under Phase 3 guidelines starting in July. The stress interest rate is set at 3.0% in line with the Oct. 15 measures. Unsecured loans and other loans with a total outstanding balance exceeding 100 million won ($64,900) will also carry a base application rate of 100%, with a stress interest rate of 1.5%.

Regional home loans, however, will retain the Phase 2 standard — a base application rate of 50% and a stress interest rate of 1.5% — through the second half of this year to cushion the market from the shock of abrupt regulatory changes. The final applicable stress interest rate is calculated using the formula: stress interest rate × base application rate × loan-type application rate.

The stress interest rate reflection ratios also vary by loan type — variable-rate, mixed-rate and cycle-type. Variable-rate mortgage products and those with a fixed-rate period of less than five years will have 100% of the stress rate applied. Products with longer fixed-rate periods or longer rate-adjustment cycles will see progressively lower reflection ratios.

Fixed-rate products with terms of 21 years or more, where the fixed-rate portion accounts for at least 70% of the total maturity, carry a stress interest rate of 0%. For cycle-type loans, the applicable ratio varies by maturity share and fixed period — between 10 and 30 percent for Phase 2 targets (regional home loans) and between 20 and 40 percent for Phase 3 targets.

For unsecured loans, a fixed rate with a maturity of five years or more carries a 0% stress rate; a fixed rate with a maturity of three to five years carries 60%; and variable-rate and other products carry 100%. Among other loan types, officetel-backed loans follow the mortgage loan method, while the remaining loans follow the unsecured loan method.


won@heraldcorp.com