[Background]

The concentration of funds primarily in housing and real estate increases the potential for systemic risk, while simultaneously causing a deterioration in the function of financial intermediation towards productive sectors.

Accordingly, the government announced through the "Conference on Major Transition to Productive Finance (Sept. 19, '25)" and the "Emergency Household Debt Review Meeting (Oct. 15, '25)" that it would raise the floor for the risk weight (RW) applied to mortgage loans by banks utilizing the Internal Ratings-Based (IRB) approach.

[Main Points]

The risk weight (RW) floor for residential mortgage loans will be raised from 15% to 20%. This change will be applied to newly extended loans beginning January 1, 2026, and onward.