"Need to Move into My Home" Flood of Inquiries in Gangnam and Mokdong on First Day of Jeonse Loan Ban

On the 20th, Jeonse Loan Regulations for Homeowners with Properties Exceeding 900 Million KRW Market Price Take Effect

LTV Restrictions Prevent Loans with Tenant Eviction Conditions When Moving into Own Home

[Image source=Yonhap News]

[Asia Economy Reporter Jo Gang-wook] "I am currently living in a Jeonse rental, but the apartment I own is valued at over 900 million KRW. Jeonse prices have risen significantly recently; is it possible to get an additional loan for the increased amount?"

"Dear customer, since the increase is classified as a new loan guarantee, loan processing is not possible."

On the first day of the Jeonse loan regulations for homeowners with properties exceeding 900 million KRW market price, the loan counters at commercial banks were generally quiet on the 20th. However, the situation was different behind the scenes. Instead of in-person visitors, phone inquiries surged. Especially at branches located in Gangnam and Mok-dong, where high-priced apartments are concentrated, the volume of phone calls was so overwhelming that handling other tasks became nearly impossible.

That afternoon at a branch of Bank A in Daechi-dong, Seoul, the branch was bustling with customers handling various tasks, but there were not many customers at the loan counter itself. However, the loan officer was constantly busy answering ringing phones without a moment to put down the receiver.

The officer said, "So far, there have been no new consultations," but added, "However, phone inquiries about the possibility of extending the term for existing Jeonse loan customers have been nonstop." He continued, "There were also many inquiries about additional loans, and when I explained that new loans are not possible, some customers asked if there were other ways to cover the shortfall."

An employee at a branch in Seocho-dong said, "Since the announcement of follow-up measures related to Jeonse loans last week, there have been continuous inquiries about the possibility of extending terms for existing Jeonse loan customers and whether loans can proceed for customers who have already signed Jeonse contracts."

At the Mok-dong branch, cases of urgent loan applications from high-value homeowners were hard to find. However, there were many phone consultations expressing dissatisfaction about the impossibility of additional loans due to increased Jeonse deposits at contract maturity, as well as inquiries regarding homes exceeding 900 million KRW in combined value for married couples.

Other banks reported similar situations. Although there were many customer visits and phone consultations last week when the Jeonse loan regulation implementation plan was announced, on this day, except for some branches, the atmosphere was generally calm. In the Gangseo and Gangbuk areas, including Mapo, Yongsan, Seongdong, and Gwangjin districts, Bank B received occasional inquiries.

An employee at a Seongdong branch explained, "Jeonse loan consultations usually happen 2 to 3 weeks in advance, and since customers were already aware of the policy implementation, those needing loans had already obtained them. Therefore, there was no new loan demand, and it seems there were no inquiries because the full regulation of Jeonse loans was clear." He added, "However, there were inquiries about the possibility of extending loans for existing homeowners with properties exceeding 900 million KRW and questions about the market price evaluation criteria for their owned homes."

Among the inquiries, some expressed concerns that due to LTV restrictions, loans with tenant eviction conditions cannot be executed when moving into their own homes, which could disrupt their financial plans. In the worst cases, those who tried to maximize their loan limits under the existing loan regulation system faced situations where they had to give up moving into their purchased homes and either live in monthly rent or sell their properties. Because of this, a national petition requesting that the LTV limit for Jeonse return loans for single-homeowners before the December 16 regulations be set at 40% was submitted to the Blue House the previous day.

The petitioner stated, "Due to the loan limit application during the tenant eviction period, there have been problems with financing. Also, for single-homeowners who had long planned to move in, returning the deposit to tenants is not proceeding smoothly," and argued, "Those who owned homes before the policy should follow the previous policy to avoid unfairness."

C, who agreed with this petition, said, "Even though they are single-homeowners, if they cannot move into their own homes, they cannot get loans for the increased deposit on their current Jeonse rental, forcing them to downsize or switch to semi-Jeonse and bear monthly rent. It is unfair not to be able to move into their own home, and forcing them to rent it out and pay taxes?is that the government's policy goal?"