Watchdog chief signals tighter rules on aggregate household loans

▲ Lee Chan-jin, governor of the Financial Supervisory Service (Yonhap)

watchdog chief-household debt

Watchdog chief signals tighter rules on aggregate household loans

SEOUL, March 26 (Yonhap) -- The chief of the country's financial watchdog said Thursday that the authorities are working to draw up measures to curb still high household debts, signaling that stricter rules may be set in motion this year.

In a meeting with reporters, Lee Chan-jin, governor of the Financial Supervisory Service (FSS), said there is the high possibility of imposing more stringent rules on aggregate loans by lenders.

The authorities are planning to announce a set of measures next week to rein in household debts.

"It is hard to predict at which level their aggregate household loan growth is set ... and a tighter target on the aggregate level of household loans than last year is highly likely," Lee said.

The FSS chief also warned that any illegality in household-loan extensions will be sternly punished, citing a case under which a borrower buys a home financed by loans for business-only purposes.

Household loans have recorded a downward trend since December as the government has maintained tighter loan and home purchase regulations since last year in response to surging housing prices in Seoul and parts of the greater metropolitan area.

Household loans extended by South Korean banks fell for the third consecutive month in February, though home-backed loans rebounded slightly due to seasonal demand for moving.

President Lee Jae Myung recently reiterated his strong commitment to stabilizing the real estate market and issued strong verbal warnings against owners of multiple homes.

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