South Korea relaxes household debt growth target to support first-time homebuyers amid market pressure

South Korea’s financial authorities have lowered this year’s household debt growth target from 1.5% to 3%, easing lending restrictions to help first-time homebuyers and ease market pressures, amid concerns over access to mortgage loans.

South Korea’s financial authorities have eased this year’s household debt growth target to 3% from 1.5% after a wave of complaints that tighter lending rules were shutting ordinary homebuyers out of the market. According to Newsis, the move is intended to preserve a cautious approach to household debt while giving banks more room to lend to borrowers buying homes for their own use, particularly those struggling to secure money for apartment settlements.

The shift follows months of tighter controls that pushed banks to raise loan barriers in order to stay within their lending limits. Lenders had already curtailed mortgage applications from brokers and non-face-to-face channels, and some cut home-purchase loan ceilings sharply. In one especially visible example, KakaoBank’s daily mortgage intake reportedly ran out within minutes of opening, underscoring how quickly demand had outstripped available capacity.

Pressure on policymakers intensified as would-be residents of new apartment developments said they were being forced into a race simply to obtain a loan application slot, rather than compare rates or terms. At a public forum last month chaired by President Lee Jae Myung, one prospective resident in Suwon said bank-level limits tied to the household loan cap had prevented access to a completion-payment loan. The Korea Herald and other local outlets said the revised target should give banks more flexibility to serve first-time buyers, newlyweds and other genuine demanders, even as authorities keep a firm watch on the housing market.