As the government relaxed the regulation on the loan-to-value (LTV) ratio and the Bank of Korea lowered the benchmark interest rate by 0.25 percentage point to 2.25 percent this month, the balance of outstanding mortgage loans has increased rapidly.
According to banking sources on August 25, the combined balance of home mortgage loans provided by six commercial banks including Kookmin, Woori, Shinhan, Hana, Nonghyup, and Standard Chartered Korea was 282.749.9 billion won as of August 22, up 1.14 percent (3,202.7 billion won) from the end of July. This is up 47 percent (1,023.8 billion won) from the net increase volume in July (2,178.9 billion won).
Meanwhile, the volume of mortgage loan applications has increased faster than the actual loan amount. For example, the application volume that Standard Chartered has received for this month to date was 927.5 billion won, about three times more than the last month's 313.7 billion won. The bank is expected to approve about 90 percent of the applications.
Park Jong-gwan, senior manager responsible for individual loans for the bank, said, "The upward adjustment of the loan-to-value ratio ceiling to 70 percent and the central bank's rate cut have encouraged people to take out mortgage loans. There are more applicants who want to buy new homes than those who try to switch the loans at lower rates."
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