[Financial Microscope] First Time Even Existing Loans Are Shaken... How Have Multiple-Home Owner Rules Evolved?

Regulation and easing repeated with shifts in the housing market and government stance
The Lee administration returns to Moon-era levels in just six months
Now even existing loans are in the crosshairs... "the strongest signal ever"

After President Lee Jaemyung's remarks, loan regulations on multiple-home owners have emerged as a new hot topic in the financial sector. Financial authorities are fleshing out regulations in a direction that will effectively ban maturity extensions and refinancing for loans held by multiple-home owners. The fate of the "multiple-home owner loans" policy has long shifted depending on real estate market conditions and the policy stance of each administration. This time, however, many assess that the government has pulled out the strongest card among all previous administrations. Why is that?

Loan limits on new borrowing shifted with each administration...from 70% LTV to a total ban

Loan regulations for multiple-home owners under past administrations swung between extremes depending on real estate market conditions, such as periods of sharp price surges or declines. Each administration's stance on real estate and multiple-home owners also affected loan regulations. Mortgage loans for multiple-home owners have mainly been regulated in a way that makes new borrowing more difficult, with a focus on curbing asset accumulation. By contrast, in the case of rental business operators, the system was initially encouraged when it was introduced, but during periods of soaring home prices it was singled out as a speculative channel and then strongly blocked.

Loans to multiple-home owners were most active under the Park Geunhye administration. At that time, due to the aftermath of the global financial crisis, the real estate market suffered from a glut of unsold homes and a virtual standstill in transactions. In response, through the so-called "Choinomics" led by Choi Kyunghwan, then Deputy Prime Minister for Economic Affairs and Minister of Strategy and Finance, the government in 2014 eased regulations so that multiple-home owners, like those without homes, could take out mortgages up to 70% of the home price (loan-to-value ratio (LTV) of 70%). Once lending was relaxed, demand revived, jeonse (lump-sum lease) demand shifted to purchases, and home prices began a gentle upward trend. However, within one year, the number of multiple-home owners increased by around 150,000, triggering a sharp rise in the share of multiple-home owners.

Under the Moon Jaein administration, loans to multiple-home owners moved in exactly the opposite direction from before. As home prices in Seoul soared due to excess liquidity following the COVID-19 shock, the Moon administration declared an all-out war on speculation to curb real estate overheating and tightened lending. Through the August 2, 2017 measures, it reduced the LTV for multiple-home owners in speculative overheated districts, including all areas of Seoul, to 40%, and in 2018 it imposed a complete ban on new mortgages in regulated areas. For rental business operators, this period is remembered as the harshest time. Although they were encouraged in the early days of the administration to increase the supply of private rental housing, once home prices surged, they faced difficulties such as loan cutoffs and the abolition of new registrations. The Rental Business Interest Coverage Ratio (RTI) was also introduced during this period.

Loans to multiple-home owners were partially revived under the Yoon Sukyeol administration. In 2023, the administration partially eased loan regulations, allowing LTVs of up to 30% in regulated areas and up to 60% in non-regulated areas. Even though the total debt service ratio (DSR), which sets loan limits based on income level, remained in place, loans are understood to have increased significantly during this period. According to the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup), the outstanding balance of mortgages held by multiple-home owners rose from 1.54202 trillion won at the end of 2022 to 3.84028 trillion won in 2024.

The Lee administration returns to Moon-era levels in just three months...now even existing loans fall under regulation 

Under the Lee Jaemyung administration, the door that had briefly been opened to 30% LTV (in regulated areas) for multiple-home owners during the Yoon Sukyeol administration has been shut again. Mortgage loans for multiple-home owners were blocked under the June 27 measures last year, and loans for rental business operators in the Seoul metropolitan area and other regulated areas were also cut off under the September 7 measures. In effect, the situation has reverted to the Moon administration era, when loans to multiple-home owners were virtually banned.

Even so, this administration has once again brought multiple-home owner loan regulations to the fore. This time, it is zeroing in on maturity extensions and refinancing for existing borrowers. Unlike previous administrations, which focused on regulating new loans, this time existing loans have also been brought into the regulatory sphere. Rather than simply refusing to grant new loans, the authorities are moving in a direction of clawing back existing ones. Kim Hyoseon, Senior Real Estate Specialist at NH Nonghyup Bank, assessed this as "the strongest loan regulation signal compared with past administrations."

Experts view this as a measure to push homes owned by multiple-home owners onto the market. Yang Jiyeong, Senior Specialist at Shinhan Premier Pathfinder, said, "The government appears to believe that the cause of price instability lies in supply, and this is a measure aimed at bringing more listings to the market for transactions, in addition to new supply." The idea is that if banks take a stricter view of maturity extensions or refinancing and refuse them, multiple-home owners who feel burdened by having to repay principal will be indirectly induced to put their properties up for sale.

Kim added, "They are effectively saying they will apply strict, new-loan-level standards to maturity extensions on existing loans that could previously be handled with just an interest rate adjustment. I see this as sending a clear signal not to become a multiple-home owner," and predicted, "With both tax policy and lending being tightened, there is a high possibility that owners will try to sell before maturity rather than waiting until then."

However, she pointed out that if the properties are not in prime locations or are less attractive asset types such as non-apartment housing, they may not sell even if they are listed, potentially creating another problem. Kim said, "For highly liquid homes, once listings come out, transactions can proceed naturally and this can have a positive function. But among the properties owned by multiple-home owners, there are more homes that do not fall into that category," adding, "Given that current buyers tend not to purchase simply because something is cheap, if loan regulations are tightened while properties remain unsold, multiple-home owners could temporarily face problems with their creditworthiness, and this could also affect the financial sector."