South Korean banks curb variable‑rate mortgages as regulators weigh loan relief for young buyers

South Korean banks have begun pulling variable‑rate mortgage products from the market. IBK Industrial Bank stopped offering variable‑rate home loans at all branches on July 21, and NH Nonghyup Bank halted face‑to‑face servicing of its variable‑rate mortgages on June 1, limiting new applications to mobile channels under tight caps. The move is aimed at meeting household‑loan‑total‑amount targets as variable‑rate loans, which can be up to 1 percentage point cheaper than fixed‑rate loans, attracted strong demand.

At the same time, the Bank of Korea is tightening monetary policy, with expectations that fixed‑rate mortgage rates could rise to about 8 % by year‑end. In response, the Financial Services Commission is reviewing measures to exempt youth, newly‑weds and first‑time homebuyers from total‑loan‑volume limits, and is also considering loosening loan‑to‑value ratios for new‑construction homes while tightening guarantees for non‑resident owners. Alternative financing options such as credit‑card installments for acquisition tax, deposit‑backed loans and insurance‑backed loans have surged as borrowers seek ways around tighter credit conditions.