Kwon Dae-young, Secretary-General of the Financial Services Commission, said on the 27th, "The behavior of purchasing dwellings with excessive debt beyond repayment capacity has led to repeated overheating and stagnation in the housing market," and noted, "It is time to break the vicious cycle."
Secretary-General Kwon made this comment during a joint emergency household debt review meeting held with government agencies that morning. On that day, the Financial Services Commission announced stringent household loan regulations. Kwon emphasized, "The financial authorities aim to establish a consistent principle of borrowing only what can be repaid and paying it back in installments from the beginning," adding, "We will thoroughly manage household debt to ensure that it does not stimulate the housing market and flows into productive areas to contribute to economic recovery."
The purpose of the latest loan regulations is to strictly strengthen loan restrictions related to dwellings in order to restore stability to the housing market and attract liquidity to non-real estate sectors. Secretary-General Kwon explained, "Policy efforts should focus on restricting loans that are not for actual demand in the metropolitan area," and stated, "Market funds must be actively utilized in productive sectors to become a catalyst for economic growth."
Subsequently, Secretary-General Kwon called for cooperation from private financial institutions to ensure the establishment of the system. Kwon urged financial companies to "enhance employee training and system checks to ensure that consumer confusion and inconvenience do not occur at service counters." Additionally, he mentioned, "Financial institutions should strengthen self-regulatory measures to ensure that the vulnerable and low-income groups are not adversely affected."
At the government review meeting chaired by Secretary-General Kwon, strong household loan management measures were discussed. The government will limit the maximum amount of housing mortgage loans in the metropolitan area and regulated regions to 600 million won starting from the 28th. Mortgage loans for multiple homeowners will also be strictly prohibited. Individuals who own two or more dwellings in these areas will not be able to borrow additional loans for housing purposes. Those with one property are also unable to take out loans for additional properties without disposing of their existing home.
Additionally, the financial authorities will reduce the total volume target for household loans (excluding policy loans) in the second half of this year to 50% of the original plan. The annual supply plan for policy loans will also be reduced by 25%.