SEOUL Feb 21 South Korea plans to require banks
to have a higher minimum proportion of fixed-rate and amortising
loans in their mortgage portfolios, an official at the country's
financial regulator told Reuters on Friday.
Under the existing mandate from the Financial Services
Commission, banks must have at least 30 percent of their
mortgage portfolio in fixed-rate loans, and another 30 percent
in amortising loans, by 2016.
The commission official, who declined to be identified, did
not specify how big an increase will be imposed. But officials
said last week banks might have to increase the minimum level
for each type of loan to 40 percent of their mortgage portfolios
A higher minimum proportion would supplement efforts by
regulators to push consumers towards more structurally-sound
loans. While figures are not available, industry and government
officials say a significant proportion of borrowers carry
variable-rate loans or interest payment-only loans, leaving them
exposed to sudden jumps in repayment obligations.
As the U.S. Federal Reserve winds down its bond-purchase
programme, analysts and policymakers worry that the expected
rise in interest rates in response to this stimulus reduction
could further constrain private consumption and drag overall
economic growth lower.
At the end of 2013, according to the commission, fixed-rate
loans accounted for 15.9 percent of banks' mortgage portfolio
while amortising loans accounted for 18.7 percent.
(Reporting by Lee Changho; Writing by Se Young Lee; Editing by