SEOUL, Oct. 8 (Yonhap) -- South Korea's top financial regulator said Monday he will beef up measures to prevent a further slump in the metropolitan property market as part of efforts to expedite the economic recovery.
"Chances for a protracted economic slowdown are high, thus a strong possibility that household debts will worsen on a sagging property market," said Gov. Kim Seok-dong, the head of the Financial Services Commission (FSC), at the annual parliamentary inspection.
He pointed out that a lot of mortgage holders are having trouble managing their debts they took out when the housing market hit a boom, until they began to take a dive as the local property market faltered mainly due to an oversupply.
"We will promptly respond to help those in the low-income group and the aged borrowers struggling to repay the mortgage principle since the process of economic recovery has been slow," he said.
The regulator's remarks came as the South Korean economy has been grappling with household debts that have piled up to a record, leading to sap consumption and hurt overall growth.
The country's household debts stood at 922 trillion won (US$830 billion) as of the end of June, of which about 400 trillion won came from mortgages, according to the Bank of Korea.
The property markets in some metropolitan towns have fallen by an average of between 15-20 percent as of last month, compared with the period between 2006 and 2007 when the values had hit an all-time high, FSC data showed.
The financial watchdog has been on the move since July with measures to lift the borrowers' financial burdens, including curbing excessive mortgage lending and allowing them to defer their repayment periods.
As part of ongoing efforts to cap household debts, Kim vowed to expand the debt restructuring program, known as the pre-workout, for those with a repeated delinquency history.
The watchdog will soon introduce the "trust and lease back" program, which allows troubled mortgage borrowers to entrust their properties to the bank and pay a rental instead of paying the principal, until the debtor's financial status gets better.
Meanwhile, the FSC will work by the law in dealing with additional savings banks subject to business suspensions due to poor capital status, offering each a chance for normalization if they are considered capable of doing so, he said.
Local savings banks have been plagued by financial difficulties since 20 players had their businesses stopped by the regulator last year. A total of 93 currently under operation logged a combined net loss of 1.7 trillion won on-year as of end-June, according to the regulator.
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