Financial Authorities Consider DSR Regulation for Jeonse Loans to Curb Household Debt Increase

 

 

 

 

As warnings light up over the recent surge in household debt, financial authorities are actively considering the application of the Debt Service Ratio (DSR) regulation to Jeonse loans.

The Financial Services Commission previously announced in its annual work plan the introduction of DSR regulations for Jeonse loans. With the recent spike in household debt, they are accelerating the formulation of specific measures.

Jeonse loans have been pointed out as a major factor in the increase in household debt and rising house prices due to relatively easy loan procedures and lump-sum repayment methods.

However, concerns also exist regarding the introduction of DSR regulations as Jeonse loans are an essential means for housing stability for low-income earners.

The financial authorities plan to take a phased approach to minimize the impact on genuine demanders and reduce the effect on housing stability when introducing DSR regulations.

Initially, applying the DSR only to the interest repayment portion of Jeonse loans for homeowners is being strongly considered.

Experts predict that the impact of the Jeonse loan DSR regulation on low-income and genuine demanders will be limited, but they question the effectiveness in curbing household debt.

Meanwhile, to curb the rising trend of household debt, financial authorities will conduct on-site inspections of household debt in the banking sector starting from the 15th and take comprehensive measures such as calculating the DSR for all loan products.

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Financial Authorities Consider DSR Regulation for Jeonse Loans to Curb Household Debt Increase