By Park Hyong-ki
The government is expected to unveil its measures next week to cool down soaring household debt.
Initially, it sought to begin the measures earlier in August. Instead, it came out with a policy to stabilize the housing market on Aug. 2, and sought to wait until it took hold.
Given apartment prices in Seoul, especially in affluent Gangnam, are climbing back up despite the Aug. 2 measures, the government is likely to introduce tougher measures on household debt.
The Aug. 2 real estate measures are considered the strongest aimed at tackling speculation and restricting ownership of multiple homes and mortgages.
It includes further strengthening the borrowing regulations through loan qualification metrics such as loan-to-value and debt-to-income ratios.
However, the Ministry of Land, Infrastructure and Transport said this was not enough to correct the abnormal housing sector.
The finance ministry has also indicated a secondary measure to stabilize apartment prices and household debt.
Apartment prices in Seoul rose 0.04 percent on average as of mid-September, according to Korea Appraisal Board.
"We are considering various ways to come up with a measure ensuring a soft-landing (of those with heavy debts)," Finance Minister Kim Dong-yeon said at a meeting last month.
The country's household debt, which has surpassed 1,400 trillion won, is one of reasons for sluggish consumption. The size nears the annual output of Asia's fourth-largest economy.
This is also negatively affecting private investment.
Worse, any hike in the interest rates would greatly weigh on debtors. The central bank has kept the benchmark rate at a historic low 1.25 percent for longer than a year, which is the same as that of the United States.
The U.S. rate is feared to top that of Korea later this year in case the former's central bank raises its rate. Then, the latter may face a capital flight from its bourses and bonds markets.
The government is expected to unveil its measures next week to cool down soaring household debt.
Initially, it sought to begin the measures earlier in August. Instead, it came out with a policy to stabilize the housing market on Aug. 2, and sought to wait until it took hold.
Given apartment prices in Seoul, especially in affluent Gangnam, are climbing back up despite the Aug. 2 measures, the government is likely to introduce tougher measures on household debt.
The Aug. 2 real estate measures are considered the strongest aimed at tackling speculation and restricting ownership of multiple homes and mortgages.
It includes further strengthening the borrowing regulations through loan qualification metrics such as loan-to-value and debt-to-income ratios.
However, the Ministry of Land, Infrastructure and Transport said this was not enough to correct the abnormal housing sector.
The finance ministry has also indicated a secondary measure to stabilize apartment prices and household debt.
Apartment prices in Seoul rose 0.04 percent on average as of mid-September, according to Korea Appraisal Board.
"We are considering various ways to come up with a measure ensuring a soft-landing (of those with heavy debts)," Finance Minister Kim Dong-yeon said at a meeting last month.
The country's household debt, which has surpassed 1,400 trillion won, is one of reasons for sluggish consumption. The size nears the annual output of Asia's fourth-largest economy.
This is also negatively affecting private investment.
Worse, any hike in the interest rates would greatly weigh on debtors. The central bank has kept the benchmark rate at a historic low 1.25 percent for longer than a year, which is the same as that of the United States.
The U.S. rate is feared to top that of Korea later this year in case the former's central bank raises its rate. Then, the latter may face a capital flight from its bourses and bonds markets.
