Seoul, October 14 (Union News)-Korea rents homes as part of an effort to protect those who actually need to rent when the government announces additional steps to govern household debt this month. The head of the country’s financial regulators, who will ease the strict controls on loans made for, said Thursday.
Ko Sung Bum, chairman of the Financial Services Commission (FSC), spoke at a brief meeting with reporters after the forum in Seoul, managing such loans for home leasing under the “Jeonse” agreement. Add a “flexible” way.
“For loans lent for Jeonse in October, November and December, total control will be flexible,” Ko said. “Because of the increased lending to Jeonse, we will be able to break the growth limit of unpaid household debt set at 6%,” he said.
Under South Korea’s decades-old Jeonse system, the renter pays the landlord a large deposit called key money, which is returned at the end of the rental contract, which usually lasts for two years. Tenants do not pay monthly rent during the rental period.
Mr Ko said the government would announce additional measures to manage household debt “at the earliest” next week, adding that these mitigated measures could be included.
Since July, FSC has applied a stricter loan calculation, called the Debt Repayment Ratio (DSR), to mortgages. It measures how much a borrower has to pay principal and interest in proportion to his annual income.
This decision is part of the government’s push to curb rising house prices and inflation. However, such measures are frustrating from those who actually need to rent a house to live in.
In 2020, household debt increased by 7.9% year-on-year. Regulators are aiming for an annual growth rate of less than 6% this year and less than 5% next year.
However, household debt is showing no sign of giving up.
According to the Bank of Korea (BOK), the balance of bank loans to households increased by 6.5 trillion won to 10.527 trillion won ($ 87.9 billion) as of the end of September.
On Tuesday, BOK left its October policy rate unchanged at 0.75%, but suggested that interest rates could rise again next month after rising a quarter point in August to curb inflation and household debt.
http://yna.kr/AEN20211014005400320§ion=news&input=rss Relaxing Home Rental Loan Management South Korea: Financial Regulators