This undated file photo shows a poster at a bank in Seoul advertising personal and housing loans. (Yonhap)
Eun Sung Soo, chairman of the Financial Services Commission (FSC), made the announcement at a meeting with the heads of 13 banks earlier in the day.
Eun’s remarks also came after the Bank of Korea hinted that it could hold its first post-pandemic rate hike later this year as the country’s economy is recovering faster than expected.
“Tighter household debt management is needed in the second half of the year,” Eun said at the meeting, according to FSC.
Eun asked banks to minimize “unnecessary and non-urgent home loans,” the FSC said in a statement.
Lending to the population of South Korea in the first quarter grew at a slower pace, as banks tightened rules for issuing loans.
Household lending reached a record 1,765 trillion won ($ 1.56 trillion) as of March, up 37.6 trillion won from three months ago.
First quarter performance compared to 45.5 trillion won quarterly growth in the fourth quarter of last year.
Household debt is one of the risks facing the economy, as it already accounts for nearly 100 percent of the country’s gross domestic product. (Yonhap)