More banks review halting lending for jeonse homes

Following NH Nonghyup Bank’s suit, Woori Bank and others have decided to temporarily halt lending for jeonse rental homes. As the financial regulators are beefing up restrictions to bank loans to slow the growth pace of household loans that are already exceeding 1,700 trillion won (1,436 billion U.S. dollars) in total, major banks and secondary financial institutions are suspending lending en masse.

According to financial industry sources on Friday, Woori Bank has decided to temporarily halt making new loans for jeonse (lumpsum key deposit-based) rental homes through the end of September. “We manage ceilings on lending on a quarterly basis, and we have used up the permitted amount for the third quarter of the year. If we come to have room for lending due to cancellations of existing loans, we will be able to provide such loans on a limited basis,” a source at the bank said.

SC Cheil Bank temporarily halted selling products linked to new balance-based COFIX (Cost of Fund Index) among “First Home Loans” collateralized with real estate beginning on Wednesday. Internet-based Kakao Bank is also considering limiting the cap of credit-based loans to individuals to their annual salary levels in line with the financial regulator’s recommendation. NongHyup (National Agricultural Cooperative Federation) will also halt sale of certain loans, and suspend making collective loans collateralized with newly built apartment units beginning next week. Earlier, NongHyup Bank decided to suspend new home-collateralized loans and loans for jeonse rental homes through November.


Hee-Chang Park ramblas@donga.com