Authorities seek fixes across full range of group loans

President Lee Jae Myung speaks at a public forum on real estate policy held Thursday at the KBS annex in Yeouido, Seoul. From left: FSC Chairman Lee Eok-won, Land Minister Kim Yun-deok, Interior Minister Yun Ho-jung, Prime Minister Han Seong-sook, President Lee, Deputy Prime Minister and Finance Minister Koo Yun-cheol, and Chief of Staff Kang Hoon-sik. [Yonhap]
President Lee Jae Myung speaks at a public forum on real estate policy held Thursday at the KBS annex in Yeouido, Seoul. From left: FSC Chairman Lee Eok-won, Land Minister Kim Yun-deok, Interior Minister Yun Ho-jung, Prime Minister Han Seong-sook, President Lee, Deputy Prime Minister and Finance Minister Koo Yun-cheol, and Chief of Staff Kang Hoon-sik. [Yonhap]

Financial regulators have begun working with banks on measures to address the full range of group loans — including balance-payment loans, interim-payment loans and relocation-cost loans. The move comes as concerns mount that tighter household lending controls could disrupt balance-payment financing for prospective move-in residents, prompting authorities to seek a middle ground that protects supply-side lending while minimizing further stimulus to the real estate market.

The Financial Services Commission and major banks began discussions on group loan policy around 4 p.m. Tuesday. FSC Secretary General Shin Jin-chang was set to attend alongside the lending-division deputy presidents of the five major banks — KB Kookmin, Shinhan, Hana, Woori and NH NongHyup.

The meeting was arranged after FSC Chairman Lee Eok-won said Monday at a public forum on real estate policy that he would "work quickly with the banking sector to find a realistic solution." An FSC official said the agency would "discuss everything that came up at the recent forum, including balance-payment loans, and assess the overall situation."

President Lee Jae Myung also weighed in at the public real estate forum held July 23, saying there was merit to the criticism that "people proceeded in good faith based on contracts they had already signed, so how can the rules be changed after the fact." He called for measures to minimize harm to genuine end-users.

The meeting is expected to cover not only balance-payment loans but the full spectrum of group loans needed in the housing supply process, including interim-payment and relocation-cost loans. A central agenda item is how to reduce cases where buyers who signed pre-sale contracts before the lending restrictions took effect are now unable to secure balance-payment loans and face difficulty moving in.

One option under discussion is partially exempting group loans from the overall household lending volume cap. However, observers note that a broad exemption is unlikely, given widespread concern that loosening the cap too widely could reignite the real estate market.

A compromise approach that limits the scope and eligibility criteria is gaining traction. A banking industry official said the discussions would likely center on "maintaining the overall lending cap while separately defining a limited category of genuine end-users who need protection and applying a restricted exemption to them."


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