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Korea to Promote Fixed-Rate Loans to Control Household Debt

South Korea said it will encourage banks to cut lending in floating rate loans as record household debt and rising interest charges increase risks to the economy.

Banks will be asked to lift the ratio of fixed-rate loans to 30 percent from the current 5 percent by 2016, Lee Suk Joon, a commissioner at the nation’s financial regulator, told reporters today in Seoul. Lenders should also offer fewer borrowers grace periods on repayments, the Financial Services Commission said in a statement.