Ban on Apartment Loans Over 1.5 Billion Won to Be Lifted

For Non-Homeowners and Single-Homeowners... LTV Up to 50%
Deadline for Housing Disposal by Subscription Winners Extended from 6 Months to 2 Years
Additional Deregulation of Seoul Metropolitan Area to Be Reviewed in November

On the 27th, a National Assembly official is watching the Emergency Economic and Livelihood Meeting presided over by President Yoon Seok-yeol. Photo by Yoon Dong-ju doso7@

Non-homeowners and single-homeowners will be able to obtain mortgage loans even for apartments valued over 1.5 billion KRW. The guarantee for interim payment loans, which was previously applied only to houses priced at 900 million KRW or less, will be expanded to houses priced at 1.2 billion KRW or less. Additionally, the deadline for disposing of existing homes for single-homeowners who won a subscription under the condition of disposing of their existing home will be extended from the current 6 months to 2 years.

On the 27th, the government held the 11th Emergency Economic and Livelihood Meeting chaired by President Yoon Seok-yeol and announced follow-up plans related to protecting actual housing demand and normalizing transactions.

First, some financial regulations related to housing will be eased. Mortgage loans will be allowed for apartments exceeding 1.5 billion KRW. Currently, mortgage loans are prohibited for apartments exceeding 1.5 billion KRW in speculative and speculative overheating districts.

Going forward, mortgage loans for apartments exceeding 1.5 billion KRW will be allowed for non-homeowners and single-homeowners (conditional on disposing of existing homes) within speculative and speculative overheating districts, with an LTV of 50% applied. The prohibition will remain in place for multi-homeowners.

The LTV limit for non-homeowners and single-homeowners (conditional on disposing of existing homes) in regulated areas will be unified at 50%, regardless of housing price. Previously, it was applied differentially depending on ownership, regulated area, and housing price (non-regulated areas: 70%, regulated areas: 20-50%).

The guarantee for interim payment loans will also be expanded. Currently, the Korea Housing & Urban Guarantee Corporation (HUG) and the Korea Housing Finance Corporation (HF) provide guarantees for interim payment loans only for houses priced at 900 million KRW or less, but this will be expanded to houses priced at 1.2 billion KRW or less. Minister Won said, "The ceiling for interim payment loans has been too low compared to the recent rise in housing prices, so we will raise it to 1.2 billion KRW."

The deadline for disposing of existing homes for subscription winners will also be significantly extended to 2 years. Previously, single-homeowners who won a subscription under the condition of disposing of their existing home in speculative overheating districts had to dispose of their existing home within 6 months after the move-in date. This will be applied retroactively to existing obligors whose disposal deadline has not yet arrived as of October 27.

Minister Won stated, "The obligation period to sell the old house after winning a new home subscription is too short," adding, "We will strive to ensure that demand for moving or relocation is not suppressed due to transaction interruptions."

Furthermore, the government will consider additional deregulation of regulated areas.

Currently, there are 39 speculative overheating districts and 60 adjustment target areas nationwide. The government plans to hold the Residential Policy Deliberation Committee (Jujeongshim) in November.

At the Jujeongshim meeting held on the 21st of last month, 41 out of 101 adjustment target areas and 4 out of 43 speculative overheating districts were deregulated.

The Ministry of Land, Infrastructure and Transport explained this measure by saying, "Due to housing transaction stagnation and excessive regulations, actual demanders are facing difficulties in securing their own homes and relocating," and added, "To resolve this, we decided to promote measures such as normalization of financial regulations, expansion of interim payment loan guarantees, and extension of the disposal deadline for existing homes for subscription winners." They also added, "We plan to prepare and announce improvement measures for reconstruction safety inspections within this year."