Constitutional Court Rules "Ban on Mortgage Loans Over 1.5 Billion Won for Apartments Under Moon Government Is Constitutional"

Constitutional by 5 to 4... "Policy Purpose Justified"

The Constitutional Court has ruled that the Moon Jae-in administration's 2019 measure to ban mortgage loans for purchasing apartments priced over 1.5 billion KRW is constitutional.

The court dismissed a constitutional complaint filed by lawyer A, who argued that the government regulation prohibiting mortgage loans for purchasing ultra-high-priced apartments (market price exceeding 1.5 billion KRW) in speculative areas and speculative overheating districts infringed on property rights, by a 5 to 4 decision.

[Image source=Yonhap News]

In 2019, as housing prices surged in some areas including Seoul, the Moon Jae-in administration announced the "December 16 Real Estate Measures." This included a complete ban on mortgage loans for purchasing apartments priced over 1.5 billion KRW, aiming to prevent speculation. A attempted to obtain a loan for purchasing a new apartment using an apartment he owned in Seocho-gu, Seoul as collateral, but was unable to due to the government measure, and thus filed a constitutional complaint against the Financial Services Commission chairman.

The court stated, "This measure (mortgage loan ban), implemented through administrative guidance, does not exceed the regulatory authority lawfully granted to the Financial Services Commission and does not violate the principle of legal reservation," adding, "Its purpose is legitimate as it aims to stabilize the overall housing market and improve excessive capital flow into the real estate sector from the perspective of managing the soundness of financial institutions' loans." Furthermore, it added, "Banning mortgage loans for apartments over 1.5 billion KRW in speculative areas and speculative overheating districts contributes to achieving the purpose by suppressing demand for ultra-high-priced housing and mitigating price increases, and the appropriateness of the means is recognized."

Four justices dissented. Justice Moon Hyung-bae cited a violation of the principle of proportionality, while Justices Lee Seon-ae (retired), Lee Eun-ae, and Lee Jong-seok cited violations of the principle of legal reservation. Justice Moon Hyung-bae acknowledged the legitimacy of the government's purpose but judged that the appropriateness of the means and minimal infringement were not recognized. He pointed out, "Based on a 30-pyeong apartment mainly inhabited by a family of four, the average price in August 2021 for 11 districts south of the Han River in Seoul was 1.44865 billion KRW, and the recently supplied apartments in 11 districts north of the Han River were priced at 1.5 billion KRW or more," adding, "1.5 billion KRW is not ultra-high-priced but merely an average market price."