The stricter lending calculation for home mortgages, called the Debt Service Ratio, uses a new system that measures all debt principal and interest payments as a proportion of annual income.
Financial authorities said the DSR system, which was already adopted at commercial banks in March, better assesses a borrower's repayment ability and reduces the risk of default.
From next Monday, credit unions, or member-owned financial cooperatives such as Nonghyup and Suhyup banks, will implement the DSR system, the Financial Supervisory Service said in a statement.
South Korea's outstanding household debt jumped to a record 1,468 trillion won ($1.3 trillion) in the January-March period, up 8 percent from a year earlier, according to preliminary data from the Bank of Korea.
The growth of household credit has slowed for five straight quarters, but officials said a hike in the interest rate could increase the burden on vulnerable borrowers. (Yonhap)