A view of the Bank of Korea headquarter building in Seoul, South Korea, 15 June 2026. Photo by JEON HEON-KYUN / EPA
June 26 (Asia Today) — South Korean banks are restricting mortgages and personal loans months earlier than usual as rapid household debt growth threatens to exhaust their annual lending quotas.
The country’s five largest commercial banks – KB Kookmin, Shinhan, Hana, Woori and NH NongHyup – recorded household loan growth through May that exceeded targets agreed upon with financial regulators, according to banking industry data released Friday.
Their combined household loan balance increased from 767.296 trillion won ($496.4 billion) at the end of April to 770.823 trillion won ($498.7 billion) at the end of May.
The one-month increase was 3.527 trillion won ($2.3 billion).
Mortgage growth slowed, but personal credit borrowing rose rapidly as a strengthening stock market encouraged more investors to borrow money to buy shares.
Outstanding personal credit loans at the five banks increased by 2.174 trillion won ($1.4 billion), from 104.341 trillion won ($67.5 billion) in April to 106.515 trillion won ($68.9 billion) in May.
Banks have responded by reducing loan limits, restricting online applications and suspending products that allow borrowers to receive larger mortgages.
Hana Bank will suspend enrollment Wednesday in mortgage insurance and guarantee programs that allow banks to lend without deducting an amount reserved to protect tenants’ small security deposits.
Without the programs, the maximum mortgage available for an apartment may fall by about 55 million won ($35,600) in Seoul and 48 million won ($31,100) in Gyeonggi Province.
KB Kookmin Bank suspended the programs Friday, while NH NongHyup Bank had already stopped offering them.
Industrial Bank of Korea also stopped accepting some individual loan applications submitted through outside loan consultants.
Banks have also reduced unsecured credit limits.
Hana Bank and Woori Bank lowered their personal credit loan limits to 100 million won ($64,700).
Shinhan Bank is reducing the limits on revolving credit lines by as much as 20% when customers renew them.
Online lenders KakaoBank, Kbank and Toss Bank have also reduced limits on personal loans and revolving credit accounts and restricted some new lending.
Banking officials said the restrictions began unusually early this year.
Banks ordinarily introduce stronger lending controls around October or November as they approach their annual household loan limits.
This year, however, regulators set substantially lower growth targets and banks are attempting to prevent a rush of applications late in the year.
One banking official said loan applications and inquiries increased after the government signaled that it would continue tightening household debt controls.
Some borrowers are seeking loans earlier because they fear financing will become more difficult later in the year, the official said.
Annual lending restrictions are not new in South Korea.
Banks sometimes receive permission to issue additional loans if their annual limits are exhausted earlier than expected. In other cases, borrowers must delay loans until the following year.
Lee Eun-hyung, a researcher at the Korea Research Institute for Construction Policy, said banks have repeatedly adjusted lending levels to comply with annual debt-management targets.
“Whether additional lending capacity is provided at the end of the year depends on the government’s policy direction and market conditions at that time,” Lee said.
Banking officials said additional lending allocations appear unlikely this year because the government remains focused on controlling household debt and stabilizing the real estate market.
Easing restrictions while housing prices remain elevated could further stimulate demand, they said.
The possibility that banks could exhaust their quotas early has prompted some prospective borrowers to accelerate home purchases or seek loan approval before further restrictions are introduced.
— Reported by Asia Today; translated by UPI
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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260626010009438