Tight regulations on loans for home rentals will be eased, the financial regulator said Thursday.
In a brief meeting with reporters, Koh Seung-beom, the chief of the Financial Services Commission, said controls on jeonse loans taken out in October, November and December will be applied in a "flexible manner."
"We will tolerate it even if the growth rate of outstanding household debt exceeds the targeted range if that is due to a rise in loans for jeonse," Koh said.
He said he government will announce additional measures to rein in household debt next week at the earliest.
Since July, the FSC has applied stricter lending calculations for mortgage loans, called the debt service ratio, which measure how much a borrower has to pay for principal and interest in proportion to his or her yearly income.
Such measures aim to keep a lid on skyrocketing home prices and inflation, but have been criticized by people who need to borrow to rent a home to live in.
Shortly after Koh's remarks, President Moon Jae-in ordered financial authorities to closely monitor banks to ensure a smooth supply of loans for jeonse home rentals.
Last year, household debt grew 7.9 percent on-year.
The FSC seeks to bring the annual increase to below 6 percent this year and below 5 percent next year.
As of the end of September, outstanding bank loans to households grew 6.5 trillion won on-month to over 1,052 trillion won, or roughly 877.9 billion dollars, according to the Bank of Korea.
