[Exclusive] Financial Services Commission to Exclude Policy Loan DSR Regulation This Time

Financial Services Commission Concerned About Harm to Actual Homebuyers
Government to Announce New Measures Around the 15th

The government has decided to exclude policy loan Debt Service Ratio (DSR) regulations from the real estate measures to be announced this week. This decision is interpreted as taking into account the fact that policy loans, such as the Bogeumjari Loan, are not related to high-priced housing and that actual homebuyers could be adversely affected.

According to the government on October 13, the Financial Services Commission has decided to exclude DSR regulations on policy loans from the upcoming real estate measures, while including other lending regulations in the final plan. An official from the Financial Services Commission stated, "Policy loan regulations have been excluded from this round of measures."

The financial authorities excluded policy loans from the current measures based on the judgment that actual homebuyers could be significantly harmed. Policy loans, such as the Bogeumjari Loan, are offered to first-time homebuyers and young people at lower interest rates and higher limits than ordinary financial institutions, and are limited to homes priced at 600 million won or less. Therefore, concerns were raised that these loans are not aligned with the policy objective of curbing the recent sharp rise in housing prices.

Similarly, the 2023 Special Bogeumjari Loan and the 2024 Newborn Special Loan, which are also policy loans, were available only for homes priced at 900 million won or less. Recently, the average sales price per 3.3 square meters in the first half of this year in the so-called 'Ma·Yong·Seong' (Mapo·Yongsan·Seongdong) areas and Bundang in Gyeonggi Province exceeded 50 to 60 million won. Even if policy loans are included in the DSR regulations, it is unlikely to be effective.

Within the Financial Services Commission, there is also a consensus that it is important to prevent harm to actual homebuyers when determining the level of lending regulations. A senior official at the Financial Services Commission said, "If you listen to the younger officials, their approach to the policy loan DSR regulation is somewhat different," adding, "It is necessary to gather a wide range of opinions."

Currently, the financial authorities are finalizing the plan with relevant agencies, considering measures such as lowering the DSR regulation from the current 40% to 35%, applying DSR regulations to jeonse loans, and setting the loan-to-value (LTV) ratio to 0% for homes that exceed a certain price.

Meanwhile, the government plans to announce its third set of real estate measures around October 15. The main focus of this round will be the Ministry of Land, Infrastructure and Transport’s expansion of regulated areas, and the direction of tax policy will also be presented.