KB Kookmin halves mortgage cap as Korea household debt swells

KB Kookmin Bank is cutting its maximum home-purchase mortgage loan in half, one of the more direct steps a South Korean lender has taken this year to slow a buildup in household debt.

The new limits take effect Friday and stay in place until further notice, the bank said. In the Seoul metropolitan area and other government-designated regulated zones, the ceiling drops to 300 million won ($199,000) from 600 million won ($398,000). For homes above 2.5 billion won ($1.66 million), the cap is set at 200 million won.

Outside the capital region and outside regulated areas, the bank is also imposing a 300 million won cap. Previously there was no separate limit for those markets, which means the restriction now reaches beyond the most heavily regulated parts of the country.

Not every loan gets the new ceiling. Group loans, including interim-payment loans, relocation loans, and balance-payment loans, are exempt. Government fund loans, Bogeumjari loans, and loans for auction purchases by rental-fraud victims do not fall under the cap either.

Market analysts said the move reflects pressure from a recent surge in household loan balances. KB Kookmin exceeded its household loan growth target last year and was assigned a lower target by financial authorities this time around, relative to other banks.

Shinhan Bank followed a day earlier, saying it would suspend new household loans through brokers from Wednesday through the end of this month. The expectation among analysts is that other major Korean banks may introduce similar measures.

KB Kookmin described the restriction as a self-imposed step intended to preemptively manage its loan portfolio. The bank did not give a timeline for when it might lift the ceiling.