The banking sector has resumed all household eviction loan services that were suspended after the announcement of household loan regulations on June 27. Banks, which had fully halted loans due to confusion over lending conditions for loans exceeding 100 million won, have strengthened the requirements and lowered the limits.
According to the financial sector on the 30th, the five major banks including KB Kookmin, Shinhan, Hana, Woori, and NongHyup have begun to handle household eviction loans again that were suspended after the regulatory announcement. Shinhan Bank resumed lending on the 18th, Woori and NongHyup banks on the 21st, Kookmin Bank on the 25th, and Hana Bank on the 28th.
Household eviction loans are loans that landlords take out to return the rental deposit to existing tenants. Before the implementation of the loan regulations, it was possible to borrow up to 90% of the deposit, but after the regulations took effect, the limit for landlords with properties in the metropolitan area and regulated zones was set to 100 million won. However, the financial authorities caused confusion by imposing an ambiguous prerequisite condition that "a situation must be demonstrated where the landlord cannot return the deposit on their own" as an exception for loans exceeding 100 million won. Banks immediately suspended lending earlier this month and requested a legal interpretation from financial authorities, receiving a response on the 18th.
According to the response, to receive household eviction loans exceeding 100 million won within the metropolitan and regulated areas, one must meet the following conditions: ▲ Contract signed before June 27 ▲ Proof that the landlord cannot return the deposit independently ▲ Pure use of loan funds for returning the deposit ▲ Registration of residence within one month of moving in and residence for more than two years ▲ Repayment of loans with deposits received from subsequent tenants and protection measures.
A bank official noted, "If interpreted literally, 'inability to return independently' means a situation where the deposit cannot be returned without a loan, but it was conservatively interpreted as 'in the case of reverse rental situations.'"
The limit for household eviction loans has also decreased. If a borrower (the person borrowing money) rents out a property they own and themselves rent a house, the limit for the household eviction loan is reduced by the amount of the rental deposit they paid.
For example, if the borrower's dwelling deposit is 500 million won and the rental housing deposit is 200 million won, the loan limit would be 300 million won (500 million won - 200 million won) calculated by applying the loan-to-value ratio. Previously, borrowers could receive household eviction loans up to 80-90% of the deposit, but this regulation has significantly reduced the limits.
Borrowers who expected that household eviction loans would be subject to previous regulations due to contracts signed before the regulatory announcement show significant discontent. A bank official noted, "Many customers express dissatisfaction, asking why they cannot receive loans when they signed lease contracts before the regulatory announcement," adding, "Although loan applications have resumed, a significant number of loans exceeding 100 million won are being denied."