The head of the financial regulator said Friday that authorities will take additional measures to curb household debts if necessary. Kim Byoung-hwan, head of the Financial Services Commission, made the remark while reaffirming what he called the government's "unchanged" commitment to limiting the rise in household debts. "Maintaining the rate of increase in household debts to the rise in the gross domestic product is our basic policy direction, and that remains unchanged," Kim said in a press conference, held after a fiscal policy meeting also attended by Finance Minister Choi Sang-mok, Bank of Korea Gov. Rhee Chang-yong and Financial Supervisory Service chief Lee Bok-hyun. "Now is the time when we must actively manage household debts as they are rising steeply amid an increase in housing prices in and around the capital area," he told the briefing. Kim Byoung-hwan, chief of the Financial Services Commission, speaks during a press briefing on household debts at the government complex in Seoul on Sept. 6, 2024. (Pool photo) (Yonhap) An earlier report said household loans extended by the top five banks in the country grew at a record monthly high of 9.62 trillion won (US$7.19 billion) in August, just before they were required to start applying tougher curbs on household loans. An enhanced stress debt service ratio has been applied to new household loans since the start of this month, effectively reducing the size of the loans that each borrower can take out. "Each financial institution needs to review their own risks and characteristics of their borrowers to prevent their funds from being funneled into real estate speculation," Kim said. The top financial regulator added a "uniform standard" for household loans set up by a government, should there be one, cannot but lead to increased consumer inconvenience since "it cannot take into consideration the unique situation each consumer is in." Kim noted banks are already taking voluntary steps to prevent their household loans from being used for real estate spe culation. "Should household debts continue to increase despite such efforts, the government will boldly take the additional steps it is preparing in a timely manner," he said. "I ask the banks to manage their loans with a sense of responsibility. I also ask the people to take out loans that are within their repayment capacity, instead of facing difficulties by taking out loans that are too big." Source: Yonhap News Agency
