Brokerages’ overdue rate of real estate project financing loans top 10% in Dec.

[Photo by Lee Seung-hwan]

The delinquency rate of real estate project financing (PF) loans at securities companies has exceeded 10 percent amid continued uncertainty in the financial market at home and abroad.

According to data from the Financial Supervisory Service obtained by lawmaker Yoon Chang-hyun of the People Power Party on Wednesday, the delinquency rate on real estate PF loans at brokerages stood at 10.4 percent at the end of December last year, up 2.2 percentage points from 8.2 percent at the end of September.

The rise in the rate signals a risk given that the delinquency rate on real estate project equity (PE) loans at the end of 2020 and 2021 were 3.4 percent and 3.7 percent, respectively.

The overdue balance of real estate PF loans at securities firms surged to 363.8 billion won ($274.6 million) at the end of September last year and 465.7 billion won in December from 175.7 billion won in December 2020 and 169 billion won in December 2021.

The non-performing loan ratio of real estate PF loans at securities firms at the end of December last year was also high at 14.8 percent, up 3.9 percentage points from 10.9 percent at the end of September last year.

The figure was 5.5 percent in December 2020 and 5.7 percent in the following year.

The balance of non-performing real estate PF loans at securities companies soared to 663.8 billion won at the end of December last year from 484.2 billion won at the end of September last year.

The interest rate on real estate PF loans for brokerages fell 1.2 percentage points to 7.1 percent at the end of December last year after peaking at 8.3 percent at the end of September the same year, data showed.

The interest rate on variable rate loans rose to 7.4 percent at the end of December last year from 5.6 percent at the end of September but that on fixed rate loans fell sharply to 6.9 percent from 8.9 percent during the same period.

The delinquency rate on real estate PF loans, in the meantime, at other financial sectors such as banks, credit cards, and insurance companies was decent in general.

The delinquency rate on real estate PF loans at banks came to 0.01 percent at the end of December last year and that on non-performing loans 0.07 percent.

The numbers at insurance companies were 0.6 percent and 0.43 percent each, savings banks 2.0 percent and 3.0 percent, capital firms 2.4 percent and 1.7 percent, and mutual financial companies 0.09 percent.

“There’s no major concern over real estate PF loans for banks, insurers, and credit cards companies,” Yoon said. “However, the delinquency rate on real estate PF loans and non-performing loan ratio at securities companies are exceptionally high and require continued attention.”