The South Korean government will take measures to temper the surging increase in household debts next year to pre-COVID-19 levels in the four-percent range.

Finance Minister Hong Nam-ki set the goal in a meeting with officials on Thursday, after the increase rate jumped from four-point-one percent in 2019 to seven-point-nine percent last year.

To prevent excessive loans, the government will gradually apply the 40-percent debt service ratio(DSR), or how much a borrower has to pay in principal and interest against their income, to all borrowers by July 2023, from the current the current ten percent of  debtors.
The minister, however, added that regulators will take into account estimated income increase when restricting loans for young people, while also allowing lenders to offer them 40-year mortgage loans.

The Financial Services Commission(FSC) is set to announce the details of the debt management plan Thursday afternoon.