[Reporter’s Notebook] Why Policy Should Not Become Politics

Amid Flip-Flopping Policies on the Togeo Area, Chaos Unfolds in the Field
Bank Branches Face Operational Paralysis

'Tips for Open Run (Rushing to Apply) for Mortgage Loans.'

This was the most viewed post on a popular online real estate community recently. It's not about tickets for a popular singer's concert or booking KTX tickets for the holidays, but rather about an "open run" for mortgage loans.

Here's the background. The demand that was suppressed due to last year's year-end loan shutdown has carried over into this year. In addition, banks, which used to manage their total lending limits on an annual or quarterly basis, have now started managing them on a daily basis. Financial authorities, while officially emphasizing household debt management, are also pressuring banks to lower household loan interest rates in line with the base rate cuts. At the same time, they have given banks the challenging task of finding their own "operational finesse." As a result, banks have begun managing loans on a daily basis and have shifted to a constant monitoring system.

On top of this, on February 13, the Seoul Metropolitan Government abruptly lifted the land transaction permit zone (Togeo Area) designation for Jamsil, Samsung, Daechi, and Cheongdam (collectively known as Jam-Sam-Dae-Cheong), further fueling the already heated demand for loans. As a result, some banks saw their non-face-to-face mortgage loan quotas run out as soon as business opened at 9 a.m., leading to a rather absurd situation.

With demand for loans surging to the point of "open runs," red flags have been raised over household debt management. According to the Financial Services Commission's "Household Loan Trends in February," household loans in February increased by 4.3 trillion won compared to the previous month. This comes just one month after a 900 billion won decrease in January, marking a swift reversal to an upward trend. In particular, the increase in mortgage loans was overwhelming. Mortgage loans grew by 5 trillion won compared to the previous month, a significant jump even compared to the 3.2 trillion won increase in January. As a result, the Seoul Metropolitan Government ended up re-designating the Togeo Area for the three Gangnam districts (Gangnam, Seocho, Songpa) and Yongsan-gu. This came just 35 days after the land transaction permit system was lifted.

Amid the Seoul Metropolitan Government's misstep with the land transaction permit system and the financial authorities' balancing act between household debt management and interest rate cuts, ordinary people working in the field are bearing the brunt of the confusion.

Banks are receiving a flood of complaint calls. Customers who had received confirmation about their loans before signing contracts found their loans blocked after the Togeo Area was re-designated. One commercial bank employee lamented, "These days, working at the loan desk is a 3D job. Policies change every month or two, loan inquiries keep piling up, and on top of that, we have to deal with customer complaints. Even among employees, no one wants to work at the loan desk."

The real estate market is also in panic. While urgent sales were being processed following the lifting of the land transaction permit system, the re-designation has led to a flood of inquiries from contract holders worried that their loans might be blocked.

Seoul Mayor Oh Se-hoon explained that the policy was based on property rights protection and the principles of a free market, but many believe it was a political decision ahead of the early presidential election.

Policy should not become politics. Policy is effective only when it is consistent and predictable. How can the authorities expect to resolve confusion if they are the ones causing it?