Mortgage Lending in Korea : An Example of a Countercyclical Macroprudential Approach

Regulatory regimes are actively discussing macroprudential policy. Korea pursued a countercyclical macroprudential approach to prevent the overheating of mortgage lending and to minimize the risk of loan default. The Korean financial supervisory authority made adjustments in response to both the condition of the housing market and trends in mortgage loans. The lessons learned from the Korean experience are applicable to other situations. First, regulations regarding loan-to-value and debt-to-income ratios and other restrictions on mortgage lending can be employed as an important part of a countercyclical framework. Next, measures need to be applied in a timely manner and according to the specific conditions of each country. Finally, authorities should preemptively prepare macroprudential instruments before banks enter a period of rapid mortgage lending to avoid reckless mortgage lending operations and weaken any speculative motive in the housing market.

Bibliographic Details

Main Author:	Chang, Soon-taek
Language:	English
Published:	2010-12-01
Subjects:	ACCESS TO CREDIT, ACCESS TO FINANCING, ADMINISTRATIVE POWER, AMORTIZATION, AMORTIZATION SCHEDULE, AMOUNT OF LOAN, AMOUNT OF LOANS, ASSET CLASSIFICATION, ASSET PRICES, AUCTION, AUCTION PROCEDURES, BAD ASSETS, BALANCE SHEET, BANK ASSETS, BANK FINANCING, BANK FOR INTERNATIONAL SETTLEMENTS, BANK LENDING, BANK OF KOREA, BANK PROFITABILITY, BANKING INDUSTRY, BANKING REGULATION, BANKING SECTOR, BANKING SUPERVISION, BANKING SYSTEM, BANKRUPTCY, BANKS, BID, BORROWER, BORROWING, BORROWING COSTS, BUILDING BLOCK APPROACH, BUSINESS CYCLE, BUSINESS LOANS, CAPITAL ADEQUACY, CAPITAL ADEQUACY REQUIREMENTS, CAPITAL REQUIREMENT, CENTRAL BANK, COLLATERAL, COMMERCIAL BANKS, COMMUNITY CREDIT, CONSUMER LOANS, CREDIT ASSESSMENT, CREDIT CARD, CREDIT CARD ISSUERS, CREDIT CARD RECEIVABLES, CREDIT COOPERATIVES, CREDIT EXPANSION, CREDIT GROWTH, CREDIT HISTORY, CREDIT INFORMATION, CREDIT INFORMATION REGISTRY, CREDIT RATING, CREDIT RATINGS, CREDIT RISK, CREDIT RISKS, CREDIT UNIONS, CREDITOR, CREDITS, DEBT, DEBT BURDEN, DEBT OBLIGATIONS, DEBT REPAYMENT, DELINQUENCY RATE, DELINQUENCY RATES, DEPOSIT, DEPOSITS, DISCRETIONARY POWER, DISPOSITION, DOMESTIC BANKS, ECONOMIC CONDITIONS, ECONOMIC COOPERATION, ECONOMIC CRISIS, ECONOMIC DIFFICULTIES, ECONOMIC POLICIES, EXCLUSION, FINANCE COMPANIES, FINANCE CORPORATION, FINANCES, FINANCIAL CORPORATION, FINANCIAL CRISIS, FINANCIAL DISTRESSES, FINANCIAL INSTABILITY, FINANCIAL INSTITUTION, FINANCIAL INSTITUTIONS, FINANCIAL MARKET, FINANCIAL REGULATION, FINANCIAL SERVICES, FINANCIAL STABILITY, FINANCIAL SYSTEM, FINANCIAL SYSTEMS, FISCAL POLICIES, FIXED INTEREST, FIXED INTEREST RATE, FIXED INTEREST RATES, GOVERNMENT INTERVENTION, GRACE PERIOD, HOLDING, HOME MORTGAGE, HOUSEHOLD DEBT, HOUSEHOLD LENDING, HOUSEHOLDS, HOUSES, HOUSING, HOUSING DEMAND, HOUSING FINANCE, HOUSING LOAN, HOUSING LOANS, HOUSING MARKETS, HOUSING POLICY, HOUSING PRICES, HOUSING SUPPLY, INCOME TAX, INDIVIDUAL CONSUMERS, INFLATION, INFORMATION SHARING, INJUNCTION, INSOLVENT, INSTALLMENT, INSTALLMENTS, INSTRUMENT, INSURANCE, INTEREST RATE RISK, INTERNATIONAL BANK, INTERNATIONAL SETTLEMENTS, INVESTING, JURISDICTION, LENDERS, LENDING INSTITUTIONS, LENDING LIMITS, LENDING POLICY, LEVEL OF RISK, LEVERAGE, LIQUIDITY, LOAN, LOAN ACCOUNT, LOAN AGREEMENT, LOAN AMOUNT, LOAN APPLICATION, LOAN DEFAULT, LOAN DEFAULTS, LOAN LOSS, LOAN LOSS PROVISIONING, LOAN LOSS PROVISIONS, LOAN LOSSES, LOAN MATURITY, LOAN OBLIGATIONS, LOAN PAYMENTS, LOAN QUALITY, LOAN REVIEWS, LOAN SERVICING, LOW INTEREST RATE, LOW INTEREST RATES, LOWER-INCOME BORROWERS, MACROECONOMIC INSTABILITY, MACROECONOMIC POLICY, MARGIN REQUIREMENTS, MARKET CONDITION, MARKET INSTABILITY, MARKET PRICE, MARKET SHARE, MARKET STRUCTURE, MATURITIES, MATURITY, MATURITY EXTENSION, MATURITY RESTRICTION, MATURITY STRUCTURE, METROPOLITAN AREAS, MONETARY FUND, MONETARY POLICY, MORTGAGE, MORTGAGE APPLICATIONS, MORTGAGE CREDIT, MORTGAGE DEBT, MORTGAGE LENDING, MORTGAGE LOAN, MORTGAGE LOANS, MORTGAGE MARKET, MORTGAGE PRODUCTS, MORTGAGE SERVICING, MORTGAGES, MUTUAL SAVINGS, MUTUAL SAVINGS BANKS, NATURAL DISASTER, NON-PERFORMING LOANS, OIL PRICES, OUTSTANDING LOANS, OVERSIGHT OF BANK, PERSONAL CREDIT, POLICY RESPONSE, POSTAL SAVINGS, PRIVATIZATION, PROFITABILITY, PROPERTY TAX, PROVISIONING RULES, PUBLIC CREDIT, REAL ESTATE, REAL PROPERTIES, REAL PROPERTY, RECESSION, REDEMPTION, REGISTRATION OF TITLE, REGISTRY OFFICE, REGULATORY REGIMES, REMEDY, RESERVE, RESERVE RATIOS, RESERVES, RESIDENTIAL MORTGAGE, RISK MANAGEMENT, RISK OF LOAN, SAVINGS, SAVINGS BANK, SAVINGS BANKS, SECOND MORTGAGE, SECURITIES, SECURITIZATION, SEIZURE, SINGLE BORROWER, SUPERVISORY AUTHORITY, TAX BURDEN, TAX SYSTEM, TIME OF MATURITY, TITLE, TRANSFER OF OWNERSHIP, TRANSPORT, VALUE OF COLLATERAL,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20101214082720 https://hdl.handle.net/10986/3989
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