Major banks raise balance-payment loan limits for DIH Bangbae complex

Major commercial banks have all raised balance-payment loan limits for DIH Bangbae, a complex in Bangbae-dong, Seocho-gu, Seoul, ahead of its move-in next month. The move follows financial authorities' announcement that they would manage loans for genuine end-users separately to curb "open-run" scrambles for group loans at reconstruction and redevelopment complexes.

According to financial industry sources Thursday, Hana Bank raised its balance-payment loan allocation for DIH Bangbae from 100 billion won ($71.3 million) to 350 billion won, effective that day.

KB Kookmin Bank also expanded its limit from 100 billion won to 300 billion won, while Shinhan Bank raised its ceiling from 100 billion won to 150 billion won. KB Kookmin Bank additionally cut the spread on its balance-payment loans by 0.1 percentage point.

The banks expanded their limits in response to financial authorities' recent directive to resolve the "open-run" phenomenon for group loans that had emerged at certain reconstruction and redevelopment complexes.

The Financial Supervisory Service and the Financial Services Commission held a working-level meeting with heads of household lending departments at major banks Wednesday, agreeing to manage loans needed by genuine end-users at reconstruction and redevelopment project sites — including progress-payment loans, relocation-cost loans and balance-payment loans — separately from each financial institution's overall household lending cap.

The measure is expected to partially ease the difficulties prospective move-in residents had faced in securing balance payments as bank-by-bank loan limits at upcoming move-in complexes were being exhausted early.