[비즈한국] Office worker Mr. Jang (40), who signed a contract for an apartment in Hanam, Gyeonggi-do, this October, is in an emergency. He is due to pay the balance by the end of the year, but recently encountered trouble while looking into loans because mortgage interest rates keep rising.
When he consulted right after signing the contract, the rate was in the low 4% range, but recently, he was told it is 4.3–4.4%. He even heard from his loan counselor that it could approach the 5% range by the end of December. This is despite the fact that he works for a well-known, stable company. A bigger crisis is the possibility of “no loans available this year.” Some banks are moving toward suspending in-person loan applications altogether. As a result, Mr. Jang is considering asking the seller for understanding to postpone the balance payment to early next year.
Mr. Kim, an office worker in his mid-40s with a combined household income of over 300 million won before tax, is equally bewildered. Mr. Kim went to visit an apartment in Banpo, Gangnam, with the intention of selling his existing apartment worth 2.5 billion won, but he was turned away at the door by the real estate agent.
When he mentioned he wanted to view the property, the agent immediately asked, "Did you check if you can get a loan before coming here?" and added, "If you are buying this house with a loan, please confirm right here that you can get one." Mr. Kim called his bank immediately, only to be shocked. He was told that mortgage loans for buying apartments in Gangnam are unavailable, and he could only get 100 million won through a living expense loan. Mr. Kim, who cannot buy a house without a loan, eventually gave up on the Gangnam apartment purchase.
With real estate prices and loan amounts rising sharply, banks are closing their loan windows while keeping a close eye on the government. As of November 20 this year, the increase in household loans at KB Kookmin, Shinhan, Hana, and Woori Bank totaled 7.8953 trillion won. This is 32.7% higher than the annual growth target (5.9493 trillion won) that commercial banks submitted to financial authorities.
The government's atmosphere of controlling loans, which are a pillar supporting house prices, was the beginning of a vicious cycle. At the time of the June 27 measures, the government requested that the household loan growth target for the second half of the year be reduced to half of the original level. In the meantime, real estate prices soared, and buyers joined the purchasing spree by taking out loans. On the other hand, as the household loan target was lowered at the government’s request, the actual increase eventually exceeded the target.
A bank official expressed concern, saying, "The loans issued in the first half based on the one-year target ended up being 'too much' relative to the reduced target." They added, "Since banks are being criticized for being a pillar of rising real estate prices, the four major banks are now in a desperate situation."
In fact, banks are already closing their loan windows even though it is not yet December. KB Kookmin Bank stopped non-face-to-face mortgage loans for home purchases to be executed this year on the 22nd. From the 24th, it will also stop accepting in-person applications. Hana Bank decided to block mortgage and jeonse (charter) loan applications to be executed this year starting the 25th, and Shinhan Bank and Woori Bank are also expected to join in suspending household loan applications soon.
Mr. Jang, the office worker mentioned earlier, lamented, "I think the recent decrease in real estate transactions is because loans are difficult to obtain," adding, "I never imagined a situation would come where I have to worry about not being able to get a loan while trying to buy a property."