Although the Field Remained Calm Amid Expected Regulations... Confusion Deepens Over the "4th Stage DSR" Surprise

No Major Confusion in Areas Already Designated for Regulation under the 10·15 Measure
Unexpectedly Stringent Policies, Including Effective 4th Stage DSR, Cause Confusion Among Borrowers
Some Banks Temporarily Suspend Non-Face-to-Face Mortgage Loans

"This measure was somewhat anticipated, so most of the clients had already taken action in advance, and there was no greater confusion than expected." (Official from Commercial Bank A)

"Some customers even took leave from work to visit the branch right at opening hours, and from what I could tell, the number of walk-in clients increased by more than 1.5 times compared to usual." (Official from Commercial Bank B)

With the announcement of the Lee Jaemyung administration's third real estate policy, the "10·15 Housing Market Stabilization Measure," the atmosphere at bank branches remained relatively calm. This is largely because many clients had already finalized contracts in advance, having experienced the 6·27 measure and with additional regulations being signaled before the announcement. However, there was some temporary confusion in certain areas due to the time required for system updates and unexpectedly strong lending restrictions. Some banks temporarily suspended non-face-to-face mortgage loans to update their systems in line with the new measure, and the unprecedented designation of wide-ranging regulated areas led to a surge in inquiries from contract holders.

According to the financial sector on October 16, despite the government's announcement of additional household debt measures the previous day, bank branches remained relatively quiet. This is attributed to genuine homebuyers who had planned to purchase homes rushing to apply for mortgages before the announcement, as demand surged for the "last chance" before the new regulations. However, as the mortgage loan limit for home purchases in the Seoul metropolitan area and regulated zones (up to 600 million won) is now applied differently depending on the property price, related inquiries have increased.

An official from a commercial bank stated, "After the announcement of the 10·15 measure, there was a slight increase in household loan inquiries at the branch and by phone compared to usual, but it was not at the level of a surge."

Another official from a commercial bank said, "In areas such as the three Gangnam districts (Gangnam, Seocho, Songpa), as well as Mapo and Seongdong, which were already regulated or highly likely to be designated, there were almost no additional inquiries about new regulations." This is believed to be because clients had already finalized contracts and loans in anticipation of the announced regulations.

Effectively a "4th Stage DSR"... Lending Will Become Even More Difficult by Year-End

This measure included an increase in the "stress interest rate," causing confusion among borrowers. Currently, under the third-stage stress Debt Service Ratio (DSR), a stress interest rate of 1.5% to 3.0% is applied to each borrower. With this measure, the lower limit has been raised to 3%.

According to the Financial Services Commission, if the mortgage loan stress interest rate is raised to 3%, a borrower with an income of 50 million won (assuming a 30-year term, equal principal and interest repayment, and a loan interest rate of 4%) will see their loan limit decrease by at least 22 million won to as much as 43 million won, depending on the interest rate type. In particular, the higher the income, the greater the reduction in the loan limit. For a borrower with an income of 100 million won, the limit will be reduced by about 67 million to 86 million won, depending on the interest rate type. This is effectively the introduction of a fourth-stage stress DSR.

An official from a commercial bank said, "Among the inquiries we received, there were cases where clients had already signed contracts to purchase homes in regulated areas, but with the unexpected immediate implementation of the DSR strengthening, they wanted to know if there was any difference from the loan limit previously quoted during consultations, and if so, by how much it would decrease."

Some banks also temporarily suspended non-face-to-face mortgage loans to update their systems. According to this "Housing Market Stabilization Measure," the mortgage loan limit is now set differently depending on the property price in the Seoul metropolitan area and regulated zones. Specifically, ▲ for homes priced at 1.5 billion won or less, the limit is up to 600 million won; ▲ for homes priced over 1.5 billion won up to 2.5 billion won, the limit is 400 million won; and ▲ for homes priced over 2.5 billion won, the limit is 200 million won.

Accordingly, Hana Bank temporarily suspended new applications for its non-face-to-face mortgage loan products, "Hana OneQ Apartment Loan 2" and "Hana Mortgage Loan Refinancing," on October 15, the day the measure was announced. A Hana Bank official explained, "This is a measure to reflect the changes in the 10·15 real estate policy," adding, "We are working to resume as soon as possible." Shinhan Bank also began updating its system at midnight on the same day and plans to resume non-face-to-face loans from October 17.

Internet-only banks, which do not have physical branches, also temporarily suspended mortgage loan services. KakaoBank temporarily stopped accepting new mortgage loan applications from this day, and K Bank also blocked non-face-to-face mortgage loan applications from midnight the previous day. However, the restriction applies only to "new purchase funds," and applications for living stabilization funds and refinancing loans can still be made online.

In contrast, KB Kookmin Bank and Woori Bank are continuing operations without interruption.

The financial sector expects that this measure will slow the growth of household loans, but also predicts that the lending threshold for genuine homebuyers will become even higher.

An official from the financial sector said, "Banks have already been managing the total amount of household debt on their own since the beginning of this year, so there is no major confusion. However, the strengthening of lending limits and the effective introduction of a 'fourth-stage stress DSR' were unexpected moves," adding, "This will especially have a significant impact on genuine homebuyers." The official continued, "Not only banks but also secondary financial institutions have already tightened management of mortgage loans, so it will become increasingly difficult to get a loan as we approach the end of the year."