Banks are reviewing plans to limit new mortgage loans and conditional lease loans for multiple homeowners purchasing properties in overheating regions such as the three districts of Gangnam (Gangnam, Seocho, Songpa) and Yongsan. This action follows indications from financial authorities of their intention to strengthen regulations on multiple homeowners and gap investors (purchasers of properties with leasebacks) to curb the surge in household loans.
According to the financial sector on the 20th, Hana Bank is considering limiting mortgage loans and conditional lease loans for homeowners with more than one dwelling in areas like the three districts of Gangnam. A representative from Hana Bank noted, "We are discussing applying lending regulations not to the entire metropolitan area such as Seoul, but only to certain areas in Seoul where housing prices have surged in the short term," adding, "Detailed contents will be announced soon."
Hana Bank is the only one of the five major banks that has not restricted mortgage loans and conditional lease loans for multiple homeowners. Last year, during the second half when almost all banks raised their lending thresholds, it took no significant measures. Currently, the only banks providing mortgage loans to multiple homeowners for additional property purchases in the metropolitan area are Hana Bank and Woori Bank. KB Kookmin Bank, Shinhan Bank, and NongHyup Bank have already restricted new mortgage loans for homeowners with one dwelling in the metropolitan area.
Woori Bank is also discussing plans to restrict mortgage loans for multiple homeowners. There is a high possibility that restrictions will apply only to dwelling sales in the areas designated under the land transaction permission system, such as the three districts of Gangnam and Yongsan. Woori Bank had allowed loans for additional property purchases for multiple homeowners in the metropolitan area as of the 21st of last month, but the lending policy has changed just one month after the government's order to strengthen household debt management.
Conditional lease loans are also expected to become difficult to obtain. Currently, Hana Bank is the only institution handling conditional lease loans in the Seoul area. Until now, NH NongHyup Bank also provided conditional lease loans, but beginning on the 21st, it has decided to stop handling them specifically in the Seoul area. Conditional lease loans refer to loans received simultaneously under conditions such as the transfer of ownership from the landlord, reduction or cancellation of priority mortgages, and cancellation of trust registrations, which have been mainly utilized for gap investments in which properties are purchased with leasebacks.
The banks are collectively trying to tighten lending regulations again in response to the financial authorities' directive to strengthen household loan management. Kwon Dae-young, Secretary-General of the Financial Services Commission, said during a briefing at the "Real Estate Related Agencies Meeting" held the day before, "The financial sector is taking self-regulatory measures against loans for multiple homeowners and gap investors, and I think these moves might become visible in March." He added, "Like last year, we will implement similar (lending regulation) measures in the first phase this year, and if it does not go well, we plan to implement strong lending suppression policies, which are already prepared."
The financial authorities are emphasizing the principle of self-regulation of banks while mentioning the "subtle management" of their operations, but banks are in a situation where they cannot ignore the authorities' regulatory direction. A bank official stated, "While it is self-regulation, we cannot align our policies without matching the direction of the financial authorities," adding, "It seems difficult to relax lending regulations until the first half of this year."
While the financial authorities assessed that household loans, which increased last month, have stabilized this month, they noted that the sharp rise in housing prices makes it difficult to guarantee the trends. A representative from the Financial Services Commission explained, "March is typically the end of the first quarter, so banks will massively depreciate their loan bonds, which will offset the growth in household loans, and it is unlikely to increase as much as in February," but added, "However, it is a situation that cannot be overlooked." The financial authorities plan to enhance monitoring by segmenting trends in household loans by regions experiencing rapid increases in housing prices and surging transaction volumes.