South Korean authorities are seeking tighter measures to curb the country’s mounting household debt that is forecast to surpass 1,300 trillion won ($1,173 billion) within this year.

On Friday, the government and the central bank held a meeting to discuss ways to manage household debt that is growing rapidly in a record low interest rate environment. The country’s household debt stood at 1,223 trillion won at the end of March, up 11.4 percent from a year ago. If it continues to grow at a double-digit rate, the end-year figure would top 1,300 trillion won.

During the meeting, financial authorities asked the Ministry of Land, Infrastructure and Transport to consider tightening the restriction on resale of new house ownership rights as financial authorities believe that tighter screening of applications for mortgage loans alone has limits in curbing the surge of household debt.

An unnamed official said the meeting participants discussed which of measures, financial restrictions or housing supply restrictions, should have more weight, adding it is time to consider supply control to make up for borrowing restrictions.

In 2014, the government eased the regulation on resale of ownership rights of new houses built on private residential land in Seoul and surrounding cities by shortening the resale prohibition period from one year to six months in a bid to revitalize the real estate market. But another unnamed official at the land ministry hinted later Friday that the ministry would not tighten the resale restriction on new home ownership, citing limited impact of the resale prohibition on controlling the country’s household debts.

Amid looming concerns over the burgeoning household debt, the government has already decided to make loan guarantee screening regular against collective mortgage loans guaranteed by Korea Housing & Urban Guarantee Corporation (HUG) and Korea Housing Finance Corporation. In Korea, home buyers borrow a chunk of money from lenders in group for middle payments for new homes that are still under construction at the guarantee of HUG.

The government will also tighten new household loans. It is now considering lowering the top authorized limit on collateral value of land or shop against mutual finance companies.

The government is due to announce its comprehensive measures to keep household debt at a manageable level next Thursday, when the Bank of Korea will release data on household credit for the second quarter.

By Lee Sang-duk and Chung Seok-woo

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