Industrial Bank of Korea has suspended new variable-rate mortgage lending at all branches nationwide.
According to financial industry sources, the bank stopped processing variable-rate mortgage loans at its branches Tuesday. A bank official said the move was "proactive limit management to comply with household loan volume regulations."
The bank has also halted refinancing loans transferred from other banks. However, five-year cycle, 10-year cycle and fixed-rate loans will continue to be offered.
Industrial Bank of Korea is the first major bank to suspend new loan originations outright. KB Kookmin Bank earlier cut its mortgage loan limit in half, while Woori Bank reduced its per-branch lending cap to about one-third of its previous level.
The household lending shutdown is expected to spread across the banking sector as year-end approaches. Financial regulators tightened the household loan growth target this year to 1.5 percent, down from 1.7 percent the previous year. As of Wednesday, the combined household loan balance at the five major banks — KB Kookmin, Shinhan, Hana, Woori and NH NongHyup — stood at 649.66 trillion won ($440 billion), exceeding the regulator's target by around 350 billion won.
hyuk@heraldcorp.com
