Menu Content
Go Top

Economy

Stress DSR to be Implemented for Bank Mortgage Loans Starting Monday

Written: 2024-02-26 16:13:09Updated: 2024-02-26 17:02:46

Stress DSR to be Implemented for Bank Mortgage Loans Starting Monday

Photo : YONHAP News

The Financial Services Commission(FSC) announced Monday that the stress debt service ratio(DSR) system will be implemented for all bank mortgage loans starting from Monday, in order to strengthen household debt management. 

DSR is the amount of principal and interest that a borrower must repay each year divided by annual income, as banks can currently only grant loans within 40 percent of the borrower's DSR.

While the DSR was previously calculated based on the actual interest rates, starting Monday the stress interest rate will be based on the difference between the highest household loan rate in the recent five years and the current benchmark rate, with a lower limit of one-point-five percent and a ceiling of three percent.

In order to minimize the shock caused by implementing the system, the FSC plans to apply only 25 percent of stress interest in the first half of 2024 and 50 percent in the second half.

The stress DSR system will be fully implemented in 2025, leading to a potential cut in loan limits by as much as nine percent in 2024 and 16 percent in 2025, depending on the type of loan.

Editor's Pick

Close

This website uses cookies and other technology to enhance quality of service. Continuous usage of the website will be considered as giving consent to the application of such technology and the policy of KBS. For further details >