South Korean banks are repeatedly tightening and reopening household lending as they try to stay within annual growth quotas, creating a recurring year-end "lending cliff" for owner-occupier homebuyers. The disruptions arise because mortgage applications may be made months before the balance is paid, while a bank’s available quota can be exhausted in the interim. KB Kookmin Bank resumed mortgage and unsecured-loan refinancing from other banks in January this year after stopping it late last year, but blocked applications again in June. Shinhan Bank normalized household lending through loan brokers early in the year before suspending applications again in July. Internet-only banks began halting overdraft-account sales and reducing credit limits from June, while regional banks restricted mortgage insurance and cut unsecured-loan limits. The current framework traces back to 2021, when financial authorities required banks to hold household-loan growth at about 5% to 6% from the end of the previous year. The approach was eased somewhat in 2023 and 2024, but caps were tightened again starting last year. This year’s target was set at 1.5%, down from 1.7% last year, bringing the lending cliff earlier. Bank officials and market participants are calling for greater predictability and for lenders to have more discretion to assess borrowers’ income, credit standing and collateral value.