Shinhan Bank is setting aside a special mortgage quota of 500 billion won ($360 million) for borrowers aged 39 or younger, channeling lending capacity freed up by regulators' easing of household debt growth targets to young buyers first.
Shinhan Bank notified loan brokers on the 17th that it would run an additional special mortgage quota totaling 500 billion won for customers aged 39 or younger, according to financial industry sources. The bank plans to release 250 billion won in a first round starting on the 18th, with the remaining 250 billion won available from Oct. 2. Loans will be disbursed between Nov. 6 and Nov. 18, targeting young owner-occupier buyers who must settle final payments on home purchases during that window.
The bank had already closed broker-channel mortgage applications ahead of schedule earlier this month. Shinhan Bank resumed accepting mortgage applications through loan brokers on the 1st, but halted them two days later after the quota was exhausted amid a rush of applications.
The special quota concentrates on young borrowers the lending capacity the bank secured after the government relaxed its household debt caps. On Aug. 13, the government raised the financial sector's management target for this year's household loan growth rate to about 3% from an initial 1.5%. As a result, the annual household loan growth target for the five largest banks rose by roughly 2.78 trillion won to about 7.11 trillion won from about 4.34 trillion won, according to sources.
Financial regulators instructed lenders to use the additional capacity first for housing stability for young adults and for easing funding difficulties faced by owner-occupier buyers. At a household debt review meeting on the 9th, Shinhan Bank also signaled a policy of allocating its limited household lending capacity to young borrowers first, sources said. A senior Shinhan Bank official said the bank "judged that there was a need to supply loans first to young people, who are buying homes to live in," adding that it "will continue working to keep funding flowing to those who need loans."
Banks remain conservative about expanding conventional mortgage lending. Shinhan Bank manages household loans through brokers under monthly caps, while KB Kookmin Bank maintains a 300 million won ceiling on mortgages. Woori Bank is also keeping in place a measure limiting each branch to 1 billion won in housing-related lending per month.
Mortgage demand has shown little sign of slowing. Outstanding mortgage balances at the five largest banks stood at 621.273 trillion won at the end of August, up 3.3319 trillion won from 617.9411 trillion won at the end of July. The balance fell to 620.6838 trillion won as of the 14th of this month, but the industry judges that it cannot loosen controls given loan demand tied to the autumn moving season.
A Shinhan Bank official said the move should be seen as "an allocation of the additional lending quota secured in line with the government's policy direction," adding that the bank "did not create the volume for young borrowers by cutting existing loans, but gave them priority in the expanded lending capacity."
