Financial authorities assign PF managers, begin talks on household loan targets

Financial authorities have begun follow-up action on the real estate finance package announced Thursday. They ordered financial institutions to designate a manager for each distressed project financing (PF) site to closely oversee normalization efforts, and launched consultations to adjust household loan volume targets for individual lenders. Any additional lending capacity secured through the adjustment will be directed toward genuine housing demand, including relocation loans, interim construction loans and balance payment loans.

FSC Chairman Lee Eok-won convened an expanded household debt review meeting at the Korea Federation of Banks on Friday, gathering officials from related ministries, financial regulatory bodies and the five major commercial banks to discuss implementation plans for the comprehensive real estate finance package announced Thursday.

Lee called on the financial sector to strengthen its site-by-site management framework to accelerate the normalization of distressed PF projects. In his opening remarks, he said, "We ask that financial institutions, working together with the Financial Supervisory Service, designate a manager for each distressed site within their own normalization funds and draw up and carry out an implementation plan so that normalization can proceed swiftly."

Lee also asked the Korea Asset Management Corp. to move quickly to activate new normalization funds and to strengthen coordination among syndicated loans and the financial sector's own normalization funds. The Financial Supervisory Service will review normalization plans for individual sites included in sector-specific normalization funds and pursue follow-up measures, including establishing a PF support center to help resolve difficulties.

On household loans, authorities will begin consultations to reset volume targets for individual financial institutions. With the government having raised the overall household loan growth target Thursday, regulators plan to develop detailed operating guidelines to ensure the additional lending capacity flows into genuine housing needs such as relocation loans, interim construction loans and balance payment loans.

Household loan growth across all financial sectors slowed in July compared with the previous month but remained elevated. Total household loans rose 6.2 trillion won ($4.38 billion) in July, down 2.1 trillion won from the 8.3 trillion won increase recorded in June. Still, the July figure was 4 trillion won higher than the 2.2 trillion won increase in the same month last year. From January through July, household loans across all financial sectors grew 35.3 trillion won, approaching last year's full-year increase of 38 trillion won.

Mortgage loan growth eased from 4.5 trillion won in June to 3.5 trillion won in July, while the increase in other loans narrowed from 3.8 trillion won to 2.7 trillion won. Bank-sector household loans also saw their growth slow over the same period, from 7.6 trillion won to 5.4 trillion won. Bank mortgage loans rose 3.4 trillion won in July — of which 2.5 trillion won came from banks' own mortgage products and 1.1 trillion won from the government-backed Didimdol and Buitimok loan programs, while products including the Bogeumjari loan fell 100 billion won. Household loans from the secondary financial sector rose 800 billion won, matching the pace of the previous month.

"Household loan growth remains well above historical averages, and the pace at which annual volume management limits are being used up is somewhat fast — this is not a situation where we can afford to be complacent," Lee said. He added that housing transaction volumes were rising steadily, particularly in the Greater Seoul area, and that demand for household loans was expected to stay high for now, underscoring the need for active management.