Lifetime First Home Loans Worth 20 Billion KRW per Month
Surged to 500 Billion KRW After June 17, 2017 Measures
Assemblyman Kim Jeongjae: "Premature Measures Fueling Reckless Debt"
During the Moon Jae-in administration, every time real estate measures were announced to stabilize the real estate market, loans for first-time homebuyers actually surged. There are criticisms that the government's measures did not curb housing prices but rather fueled the 'all-in' frenzy.
According to data submitted by the Ministry of Land, Infrastructure and Transport to Kim Jeong-jae, a member of the National Assembly's Land, Infrastructure and Transport Committee from the People Power Party, the number and scale of first-time homebuyer loans under the Ministry of Land, Infrastructure and Transport sharply increased from July to September following the June 19 measures announced just one month after the Moon Jae-in administration took office in 2017. This is the first time the monthly scale of first-time homebuyer loans has been disclosed.
The loan scale, which was 219 cases (20.2 billion won) in May 2017, surged to 3,945 cases (447 billion won) in July, immediately after the first real estate measure was announced. It then rose to 4,608 cases (542.9 billion won) in August and 4,789 cases (566.5 billion won) in September, soaring more than 25 times compared to May.
At that time, the Moon Jae-in administration raised the loan-to-value ratio (LTV) and debt-to-income ratio (DTI) by 10% each in 40 regulated areas including Seoul and Gyeonggi Province as a tailored response for stable management of the housing market. However, despite these measures, as of July 28, 2017, apartment prices in Seoul rose by 0.57% within a week, recording the highest weekly increase at that time.
Afterwards, the loan scale, which had shown signs of stabilization, surged again in April 2020. This is also presumed to be influenced by the government's real estate measures. In February 2020, the Moon Jae-in administration strengthened LTV regulations in regulated areas by changing the LTV to 50% for housing prices under 900 million won and 30% for the excess amount. They also added a new condition requiring new homeowners to move into the property for mortgage loans for single-homeowners.
The number and scale of loans, which were 189 cases and 25.7 billion won in February 2020, surged nearly tenfold to 1,096 cases and 131.8 billion won in April 2020, 1,168 cases and 134 billion won in May, and 1,855 cases and 217.5 billion won in June.
Even after the consecutive announcements in April and October 2021 to strengthen household debt management measures, loans turned to an increasing trend. The loan scale, which was 1,454 cases and 188.6 billion won in October 2021, more than doubled to 2,831 cases and 388.8 billion won in just one month, and further rose to 3,454 cases and 477.2 billion won in December of the same year.
Assemblyman Kim Jeong-jae pointed out, "The Moon Jae-in administration announced real estate policies 28 times, but in reality, it only instilled anxiety among the homeless that 'they must buy a house before it's too late,'" adding, "It only increased the wealth of cash-rich and silver spoon groups, deepening polarization."
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