Eun Sung-soo, Financial Services Commission Chairman, "Apply Existing LTV 70% for Apartment Balance Loans"

Possibility of Inclusion in Additional Real Estate Measures on the 10th Focusing on Strengthened Real Estate Taxation Policies

Eun Sung-soo, Chairman of the Financial Services Commission, is holding a meeting on AI-based automobile insurance compensation services at the Automobile Technology Research Institute of the Korea Insurance Development Institute in Icheon, Gyeonggi Province, on the 9th.

[Asia Economy Reporter Jo Gang-wook] Eun Sung-soo, Chairman of the Financial Services Commission, said on the 9th regarding the reduced apartment balance loan limits due to the 'June 17 Real Estate Measures,' "We intend to provide loans at the loan-to-value ratio (LTV) of 70%, which was foreseeable at the time of contract."

This is a supplementary measure prepared in response to complaints from some apartment buyers in the newly regulated areas who are struggling due to unexpected reductions in loan limits at the time of purchase.

Chairman Eun announced this supplementary policy during a meeting with reporters after attending the 'AI-based Auto Insurance Service' roundtable held at the Korea Insurance Development Institute's Automotive Technology Research Center in Icheon, Gyeonggi Province, in the afternoon.

He prefaced by saying, "We are not fundamentally changing the basic framework," and added, "Since complaints were raised regarding the parts we had planned, we intend to provide loans as the buyers expected."

He further explained, "Since we are providing loans as expected, it seems that the previously applied LTV of 70% will be applied."

The LTV for houses priced under 900 million KRW is 70% in non-regulated areas, but it is lowered to 50% in adjusted target areas and 40% in speculative overheating districts based on market price.

Accordingly, when purchasing a house priced at 600 million KRW, loans of up to 420 million KRW are available in non-regulated areas, but if designated as a speculative overheating district, the loanable amount drastically decreases to 240 million KRW, making it difficult for actual buyers to secure balance loans. In particular, apartment buyers in Incheon’s Geomdan and Songdo, designated as speculative overheating districts, experienced confusion due to the reduced balance loan limits.

Chairman Eun said, "We are working on practical consultations," and added, "We will check if anything has been missed at the last moment, but it should not take long."

This supplementary measure is likely to be included in the additional real estate measures the government will announce on the 10th, focusing on strengthening real estate tax policies.

Regarding the criticism that credit loans have increased due to tightened mortgage loan regulations, he said, "It cannot be said unilaterally and depends on analysis," and added, "The increase in household loans can also be seen as banks actively playing their role (such as financial support for COVID-19 damages) and providing loans nonetheless."

Meanwhile, concerning the sale of his apartment in Dodam-dong, Sejong City, the previous night, Chairman Eun explained, "The timing just matched the price."

Following the December 16, 2020 real estate measures and the policy of 'one house ownership for high-ranking officials,' he put up his apartment in Dodam-dong, Sejong City (84.96㎡) for sale, but it had not sold until then.

Chairman Eun said, "Just as you don’t buy a phone immediately, buying a house also requires consideration," and added, "Please don’t think that I sold it immediately just because the Prime Minister said so."