Shinhan Bank will suspend applications for July household loans through its loan broker channel. The move follows the depletion of this month's quota in just five days, marking the first time this year that Shinhan Bank has closed broker-channel applications mid-month. Analysts interpret the development as demand shifting to Shinhan Bank's broker channel amid continued real estate-related loan demand, compounded by loan restrictions at other banks.
According to the financial industry Monday, Shinhan Bank plans to close new applications starting Tuesday, as the July household loan quota for its loan broker channel has been exhausted.
The move comes just five business days into July. It is the first time this year that Shinhan Bank has closed its broker channel mid-month. The bank is not suspending all loans through branch counters or non-face-to-face channels. Applications are scheduled to resume on the 3rd of next month.
A loan broker is an external sales channel that signs consignment contracts with banks and handles consultations and document submissions for mortgage loans and jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) loans. In Shinhan Bank's case, the broker channel is known to account for about 50% of total household loan applications.
Shinhan Bank has managed the volume of household loans received through its broker channel on a monthly basis since last year. As financial authorities strengthened their stance of reviewing the pace of household loan growth in the banking sector on a monthly and quarterly basis, the broker channel has also been used as a window for banks to control loan volumes. However, in the first half of this year, application volumes did not exceed management thresholds, so they did not actually lead to mid-month closures.
"We are not completely halting loans, but suspending because this month's allocated application volume is full," a Shinhan Bank official said. "Since last year, we have been adjusting broker channel application volumes on a monthly basis to manage the monthly and quarterly total volume of household loans."
The early closure of broker loan applications is interpreted as reflecting household loan demand that has not easily subsided. The household loan balance at the five major banks stood at 774.9608 trillion won at the end of June, up 4.1378 trillion won in a month. The increase was the largest in 11 months since July of last year. The mortgage loan balance also rose 1.7576 trillion won over the month to 615.1456 trillion won.
The recent moves by other banks to raise loan barriers, centered on broker and non-face-to-face channels, also appear to have had an impact. IBK Industrial Bank of Korea suspended new household loan applications and consultations through loan brokers starting June 25, while Hana Bank temporarily restricted enrollment in mortgage credit insurance and guarantees starting the 1st of this month. Earlier, KB Kookmin Bank and NH Nonghyup Bank also implemented the same measures. Analysts say that as some loan windows at other banks closed or their limits shrank, demand may have shifted to Shinhan Bank's broker channel, which has relatively more application capacity.
"There is a possibility that application restrictions and resumptions by each bank to meet household loan management targets will be repeated in the second half as well," a financial industry official said.
