From Today, Banks Apply 'Non-Mortgage Loan LTV 70%' Regulation

[Asia Economy Reporter Jin-ho Kim] From the 17th, the Loan-to-Value (LTV) ratio limit regulation on non-housing secured loans (non-housing mortgage loans), such as officetels and land, will be expanded to all financial sectors including banks. However, projects that announced tenant recruitment by the 16th are exempt from the related regulations.

According to the financial sector on the 17th, the Financial Services Commission recently delivered a supervisory regulation (administrative guidance) document containing these details to each financial institution in relation to the 'Household Debt Management Plan' announced on the 29th of last month.

Among household loans, non-housing mortgage loans have not increased significantly in recent years, and considering that farmers, fishermen, and small business owners have used them extensively, there were no regulations applied across the entire financial sector. Only mutual finance sectors such as NongHyup have applied an LTV 70% regulation through administrative guidance. Other sectors like banks generally applied around LTV 60% through internal rules.

However, following the controversy over land speculation allegations involving some employees of Korea Land & Housing Corporation (LH), financial authorities decided to apply the LTV 70% regulation on non-housing mortgage loans across the entire financial sector. Currently, the regulation reflects the non-housing mortgage loan rules under internal regulations or administrative guidance within the financial sector into supervisory regulations.

However, for projects that announced tenant recruitment by the 16th, loans for moving expenses, interim payments, and balance payments are also exempt from the strengthened regulations. Even if tenant recruitment announcements were not made, cases where management disposition approval or construction commencement reports were made by the 16th are also exempt from the regulations. However, if the tenant recruitment announcement was made but the sale rights are transferred from the 17th, the strengthened regulations will apply.