KB Takes Stronger Action than Government Guidelines on Consumer Credit Quality(Nov. 13, 2002)
2002-11-14On November 13, 2002, Kookmin Bank announced that it would take stronger action on consumer credit quality. The following is the copy of press release.
Press Release
In connection with the Government’s announcement of its strengthened prudential regulation of home equity loans made on November 11, 2002, Kookmin Bank has decided to carry out the following measures to preempt a property bubble situation starting November 13, 2002.
• Strengthened prudential regulation of the loans secured by real estate properties, a shift from limited regulation of housing properties to all real estate properties. Under this initiative, loan to value ratios (the “LTV”) were further reduced as a stronger measure than that required by the Government. Borrowers’ proof of income requirement is now fully in place, while variance in interest rates applied in proportion to debts carried is expected.
• Restricting financial support to the speculative investors, a measure far more stringent than that required by the Government. Under this initiative, a single borrower may not take out a home equity loan in excess of KRW 30 million for any property in addition to that any existing applicable for 1 housing property. Further, loans for the purposes of installment payments shall not be extended for that any existing applicable for 1 housing property for a single borrower.
• Reduced LTV
| Classification | LTV | Remarks on Adjustment |
|---|---|---|
| Houses (including APTs) |
60%→55%(down by 5%p) | - Small key deposit moneys for low value APTs were all included in the calculation. - All properties of at least KRW 300 million in appraised value (lowest market value) shall be subject to [LTV x Additional adjustment rate (86% max.)]; i.e., LTV for an apartment of KRW 1 billion as its lowest market value: 55% x 86% = 47.3% shall be applied |
| APTs with rapid appreciation in value | 55%→50%(down by 5%p) | |
| Officetels | 69%→55% max. (down by 14%p max.) | |
| Commercial buildings | 71%→50%(down by 21%p max.) | |
| Lands | 49%→40% max. (down by 9%p max.) |