[2·20 Real Estate Measures] Trying to Catch Genuine Buyers... "Where Can I Find 60 Million Won?"

Strengthened Loan Regulations in Regulated Areas... LTV 60% → 50%
Maintaining 60% if Conditions Like Combined Spousal Income Under 60 Million Won Are Met
"It's Practically Difficult to Meet All Three Conditions"

[Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] "Do people speculating with 1 billion won not buy because they lack 100 million or 200 million won? In the end, only genuine buyers like me, who try to secure a house by taking out as much loan as possible, suffer."

On the 20th, when the government strengthened mortgage loan regulations in adjusted areas, A, an office worker who was trying to purchase a 700 million won range apartment at Suwon SK Skyview in Jangangu, Suwon, expressed dissatisfaction, saying, "Speculators raised the house prices, but the government is tightening loans for ordinary people." Jangangu, Suwon, along with Yeongtonggu, Gwonsungu, Manangu in Anyang City, and Uiwang City, was newly designated as an adjusted area on the same day.

With the February 20 real estate measures, the Loan-to-Value ratio (LTV) for mortgage loans in adjusted areas was significantly reduced. Until now, the LTV for mortgage loans in adjusted areas was 60% regardless of the housing price. However, from March 2, the LTV will be applied differentially: 50% for amounts up to 900 million won and 30% for amounts exceeding 900 million won.

For example, when purchasing a 1 billion won apartment in an adjusted area, previously, one could borrow up to 600 million won (60% of the house price). But going forward, 50% LTV applies to up to 900 million won (450 million won), and 30% applies to the 100 million won exceeding 900 million won (30 million won), reducing the maximum loan limit to 480 million won.

The government prepared supplementary measures to ensure that the impact of this policy does not fall on genuine buyers but rather on speculators, but these have been criticized as mere "window dressing." If all three conditions are met?▲being a household without homeownership ▲house price below 500 million won ▲combined annual income of the couple below 60 million won (below 70 million won for first-time buyers)?the existing 60% LTV can be applied.

However, this supplementary measure is practically useless for dual-income couples. B, a person in their 30s planning to marry in September, said, "I was planning to purchase a newlywed home in the 600 million won range in Dongan-gu, Anyang, but due to this measure, more than 60 million won is left uncovered," adding, "I don't know where to make up the difference."

Meanwhile, although the designation of new adjusted areas takes effect from the 21st, the mortgage loan regulations will be implemented from March 2 due to bank counter training and system preparations. After hearing this news, some who had signed preliminary contracts hurried to prepare their down payments. On a real estate community, a post appeared saying, "I have a preliminary contract for an apartment in Giheung-gu, Yongin," and "I need to coordinate the contract signing date and hurry up with the loan application."