Shinhan first among major banks to open consultations for D.H. Bangbae

Plans to extend about 100 billion won to the complex

Repeats early-mover role after Maegyo Station project

Careful loan-volume management frees up capacity for end-users

Visitors look at a scale model of the D.H. Bangbae apartment complex at its show home. [Herald DB]
Visitors look at a scale model of the D.H. Bangbae apartment complex at its show home. [Herald DB]

As fears over balance-payment loans have mounted among buyers of soon-to-be-occupied apartment complexes, Shinhan Bank — which was the first lender to allocate additional balance-payment loan capacity to the Maegyo Station Palucid complex in Suwon — is now set to extend about 100 billion won ($70.2 million) in balance-payment loans to D.H. Bangbae in Seoul's Seocho-gu. The bank is being credited with opening the door to broader balance-payment loan supply by proactively channeling lending capacity, secured through disciplined household-loan management, toward end-user homebuyers.

Financial industry sources said Friday that Shinhan Bank began accepting pre-consultation applications for balance-payment loans from prospective D.H. Bangbae residents on Wednesday, while other major banks were still reviewing whether and how much to offer the complex. Shinhan was the first to move to identify actual end-user demand. Balance-payment loans refer to financing taken out at the time of move-in either to convert existing relocation and interim-payment loans into mortgage loans or to cover the remaining purchase balance.

Shinhan Bank has allocated a balance-payment loan limit of about 100 billion won to the D.H. Bangbae complex. The bank had earlier moved preemptively on July 29 — before financial authorities announced real estate-related measures — by adding 100 billion won in balance-payment loan capacity to the Maegyo Station Palucid complex, acting swiftly to minimize harm to end-users facing imminent move-in deadlines. That decision came just six days after the balance-payment loan problem at Maegyo Station Palucid was raised at a national public forum on real estate policy presided over by President Lee Jae Myung on July 23.

Because other major banks were still deliberating on additional allocations at the time, Shinhan Bank's move is credited with breaking the logjam for the broader banking sector. KB Kookmin, Hana, Woori and NH NongHyup Bank subsequently expanded or newly allocated balance-payment loan limits of around 100 billion won each for the Maegyo Station Palucid complex. Financial authorities are also reviewing ways to refine balance-payment loan regulations, as a growing number of end-users who had drawn up financing plans under the existing rules are now struggling to secure their final payments due to tightened household-loan management introduced afterward.

With Shinhan Bank leading the way, balance-payment loan support for D.H. Bangbae is expected to spread across the banking sector. However, because the complex sits at the ultra-premium end of the market, a key sticking point is the collateral value to be used when calculating loan limits. Banks have typically set balance-payment loan limits by applying the loan-to-value ratio to the appraised value of the apartment at the time of move-in. The pre-sale price for an 84-square-meter unit at D.H. Bangbae was in the 2.2 billion won range, but current asking prices exceed 3.5 billion won. Using the appraised value could significantly inflate loan amounts.

In response, the market has been discussing a proposal to base the collateral value for ultra-premium complexes on the original pre-sale price rather than the appraised value at move-in. Shinhan Bank is understood to have decided to apply the pre-sale price when calculating balance-payment loan limits for D.H. Bangbae. Some banks are considering applying the appraised value first, and lenders are still working out specific lending criteria by weighing their overall household-loan volumes and the limits allocated to each complex.

Shinhan Bank's ability to act early and repeatedly on balance-payment loan supply is attributed to its disciplined household-loan management. The bank's household loan balance grew by only about 12 billion won in the first half of this year — effectively holding steady at the level seen at the end of last year, compared with a combined increase of more than 3 trillion won across the five major banks over the same period. With financial authorities pressing banks to stay within their annual household-loan management targets, Shinhan kept first-half loan growth to a minimum, preserving capacity to serve end-users in the second half.

Industry sources say three of the five major banks have already exceeded their annual household-loan management targets. As the year progresses, differences in remaining loan capacity are expected to produce varying levels of balance-payment loan supply across banks. "We are prioritizing the lending capacity we secured through precise household-loan management since the first half of the year for end-user customers who are struggling to arrange financing ahead of their move-in dates," a Shinhan Bank official said. "We will continue to expand support for end-users in a phased manner going forward."


forest@heraldcorp.com
hyuk@heraldcorp.com