President Lee Signals Loan Extension Limits for Multi-homeowners: "Finance Must Also Be Fair"

Successive messages via SNS... "Is it fair to extend loans for multi-homeowners?"
"Granting even financial benefits is problematic," he points out
"Succeeding by holding out would mean the failure of real estate policy on multi-homeowners"
Emphasizes the possibility of mobilizing all policy tools, from regulations to taxation

Yonhap News Agency

President Lee Jaemyung, who has signaled his determination to normalize the real estate market by scaling back tax benefits such as the temporary suspension and exemption of heavier capital gains tax for multi-homeowners and rental housing business operators, has now said that it is necessary to restrict loan extensions for existing multi-homeowners. This is interpreted as meaning that the financial burden should also be increased on owners who have maintained investment- and speculation-oriented multiple homes by repeatedly extending their loans as a "hold-out strategy."

On the 13th, President Lee posted a message on X (x, formerly Twitter) titled "How should we handle existing loans for multi-homeowners when they reach maturity?" and pointed out, "Even for the sake of resolving the national task of stabilizing housing prices, it is problematic to grant financial benefits for the acquisition of multiple homes for investment or speculative purposes, rather than for owner-occupied housing."

Currently, the government limits the maximum amount of mortgage loans for the purchase of one home per household in land transaction permit zones such as Seoul to 600 million won. In those areas, if a person who already owns two or more homes purchases an additional home, the loan-to-value (LTV) ratio is set at 0%, effectively banning mortgage loans, and even a one-home owner cannot obtain a new mortgage unless the existing home is disposed of. Under these circumstances, there have been ongoing criticisms that it is unfair to those buying homes for the first time if multi-homeowners are allowed to keep extending the maturity of loans secured by their existing homes.

In this context, President Lee stressed, "We cut capital gains tax and gave them several years of opportunity, but multi-homeowners who held out and did not dispose of their additional homes are now asking for further benefits in the form of loan extensions at maturity. Would that be fair?" He added, "People who follow the rules and respect social order must not be placed at a disadvantage compared with those who break the rules in pursuit of unjust gains."

He also sent a warning message to multi-homeowners who are clinging to so-called "hold-out" tactics. President Lee wrote, "To those who still think that everything will work out if they just keep holding out, let me say this: the Republic of Korea is moving toward becoming a normal society where common sense and order are restored." He continued, "The core of a normal society is ensuring that decent people who obey the rules do not suffer losses, and that those who break the rules cannot profit," adding, "In a democratic society, fairness is the driving force of growth and development."

Yonhap News Agency

In an additional social media (SNS) message posted the same day, President Lee again asked rhetorically, "Is the (real estate) market normal right now? Is the government being unreasonable right now?" He argued that multi-homeowners choosing to forgo the opportunity for capital gains tax reductions and instead succeeding by holding out would signify the failure of real estate policies aimed at curbing ruinous real estate speculation.

President Lee stated, "We cannot allow a country where everything, including the normalization of the perpetually undervalued stock market and the restoration of a just economic and social order, is gradually returning to normal, to continue racing in reverse toward a 'lost 30 years' only in the area of real estate." He added, "If policymakers have the will and public support is secured, it is possible not only to solve the problem but also to steer the market toward a desirable state through the powers of regulation, taxation, and supply-and-demand control."

He went on, "A great leap forward through new policies is important, but the top priority task for the survival of the Republic of Korea is to normalize everything that is abnormal." He stressed, "We know what will happen to the country if we leave real estate, which is hurtling toward a lost 30 years, unattended. There is no government that can defeat the market, but there is also no market that can defeat the government." He then added, "The counterweight that gives meaning to this seemingly contradictory statement is the normality of the situation and the legitimacy of government policy."