Local commercial banks will be required to implement a stricter screening rule for mortgage loans starting Wednesday.

Financial authorities said that banks now have to apply the so-called debt service ratio(DSR) to household loans as the trial period ends. 

DSR measures how much a borrower has to pay in principal and interest payments in proportion to his or her yearly income. It is one of the barometers checked for risky household loans.

A ratio of 70 percent or over is categorized as a risky loan, and those over 90 percent as a high-risk loan.

Commercial banks must keep the proportion of risky loans to a maximum 15 percent and high-risk loans to under ten percent. 

Savings banks and non-bank lenders will apply the stricter rule from Wednesday on a trial basis before implementing it in earnest in the first half of next year.