Saemaul Geumgo to Halt New Mortgage Loans for Non-Members

Saemaul Geumgo (Saemaul Credit Cooperatives) will halt new applications for mortgage loans targeted at non-members as early as this month. Those without prior transaction history with Saemaul Geumgo may face difficulties securing funds for home purchases.

Plans are also underway to suspend the provision of preferential interest rates on mortgage loans, which were previously available to both members and non-members. While these preferential rates could be applied at the discretion of managers, this measure will effectively cease such benefits.

This action aligns with Saemaul Geumgo's previous loan restrictions. Since February 19, Saemaul Geumgo has suspended new loans for down payments, relocation expenses, and final payment loans through collective lending arrangements. In line with the government's reinforced household debt management policy, new applications for collective loans and household loans through sales agents and brokers have also been halted.

The mutual finance sector has recently been pointed to as the main source of increased household lending. While total household loans across the financial sector grew by 3.5 trillion won in March, mutual finance institutions saw an increase of 2.7 trillion won. This suggests a significant contraction in household loan supply across the mutual finance sector is likely. Concerns are rising that as lending thresholds increase, borrowers in urgent need of funds will have fewer options, potentially pushing low- to mid-credit individuals outside the formal financial system.