Business · Companies · 1 hr ago
South Korean Banks Resume Mortgage Insurance That Can Raise Loan Limits
Several South Korean banks have resumed mortgage insurance for some home loans after limiting it to slow household borrowing.
The insurance and guarantee products cover a bank's risk if tenants have a legal priority to part of their rental deposits when a home is sold to repay debts.
Without that cover, banks subtract a set amount from the loan limit, a practice called the room deduction.
In Seoul, the deduction is 55 million won per room, so insurance can allow a borrower to access a higher loan limit.
The increase is not guaranteed: debt and property limits still apply, including limits based on income and the home's value.
Some banks have reopened access, while others plan to apply it to loans paid out next year; borrowers should check each bank's terms and loan execution date.
South Korean banks are resuming mortgage insurance options that can increase mortgage loan limits by removing a deduction for possible tenant deposits.
For a Seoul apartment, the option can raise the limit by as much as 55 million won, though other borrowing limits may prevent an increase.
Banks restricted the products earlier in the year to slow household lending without fully stopping new loans.
Several banks have resumed offering the insurance, while Shinhan Bank and Woori Bank plan to apply it to some loans executed next year.
Availability and timing differ by bank and product, so borrowers are advised to check the terms and loan execution date.
- Who
- South Korean banks, including Hana, NH Nonghyup, SC First, iM Bank and BNK Kyongnam.
- What
- Banks are resuming mortgage insurance options that can increase mortgage loan limits by avoiding the tenant-deposit deduction.
- When
- Banks began restricting access in May and later resumed it at different times; some plans apply to loans executed next year.
- Where
- South Korea.
- Why
- Banks had restricted access to manage household lending totals; increased lending capacity under a revised annual growth target allowed some to reopen access.
This story does not have two clearly opposing sides.
NH Nonghyup Bank began restricting mortgage insurance access.
KB Kookmin, Hana, Shinhan and Woori banks successively restricted access.
NH Nonghyup Bank lifted its restriction on MCG.
iM Bank resumed handling the products.
SC First Bank resumed MCI handling, followed by BNK Kyongnam Bank.
Hana Bank resumed access for some mortgage products on November 2 and expanded it to variable-rate products on November 11.
- Seoul apartment limit increase
- Up to 55 million won
- Seoul room deduction
- 55 million won per room
- Hana Bank resumption
- November 2 for some mortgage products
- NH Nonghyup Bank
- Lifted its MCG restriction in late August
- Shinhan and Woori plans
- Apply to some loans executed next year