Anchor: After months of anticipation, the South Korean government has finally released a comprehensive plan to tackle the country's soaring household debt. It plans to tighten up loan regulations while scaling up support for low-income households and small businesses. Currently, the country’s household debt stands at 95-point-six per cent of gross domestic product, much higher than the average of 70 percent for the members of the Organisation for Economic Cooperation and Development.
Oh Soo-young reports.
 
Report: The South Korean government is clamping down on easy loans that have fueled the country's snowballing household debt, which has surpassed one-point-four quadrillion won. 
 
Deputy Prime Minister and Finance Minister Kim Dong-yeon and related Cabinet ministers on Tuesday announced the comprehensive plan, making it almost impossible for multiple home owners to get another mortgage. 
 
[Sound bite: Deputy Prime Minister Kim Dong-yeon (Korean)]
"[The government] will gradually reduce the speed of the increase of household debt. We will set a principle in which money is borrowed within the ability to make repayments. We will introduce in January next year a new DTI(debt-to-oncome) ratio that can more accurately reflect the borrower's income and mortgage repayment burden in the Seoul metropolitan area and regions subject to adjustment based on the housing law."
 
From next year, lending regulations for Seoul and other government-designated areas will also consider the principal of a borrower's existing homes.
 
In the second half of next year, the government will introduce the tighter debt service ratio(DSR), which will put into consideration all monthly debt payments including credit loans.
 
[Sound bite: Deputy Prime Minister Kim Dong-yeon (Korean)]
"With the risk management efforts, we will lower the rate of household debt increase by point-five to one percentage point a year to an eight-percent range from the double-digit growth seen over the last two years."

This means that the debt level will be kept between one-point-45 quadrillion and one-point-46 quadrillion won by the end of this year.

Meanwhile, to ensure low-income families can pay back their loans, the rate of additional interest charged on overdue loans will be lowered from the current six-to-nine percent to three-to-five percent.
Oh Soo-young, KBS World Radio News.