The growth in major commercial banks' home mortgage loans hit the lowest level in 18 months. The fallout is seen from the "6/27 household loan regulation," which caps mortgage limits at 600 million won, and the "9/7 supply measures," which cap jeonse loans for single-home owners at 200 million won. However, with Seoul home prices still rising, there is speculation that additional measures will be rolled out.
According to the financial sector on the 28th, as of the 25th, the balance of household loans at the five major banks (KB Kookmin, Shinhan, Hana, Woori, NH NongHyup Bank) stood at 763 trillion 2,715 billion won, up only 373 billion won from the end of August (763 trillion 898.5 billion won). Considering that the month-over-month increase in household loans before the regulation was 4 trillion to 5 trillion won, it has shrunk to about one-tenth. Although September is not over yet, absent major changes, it will mark the smallest monthly increase since -476.2 billion won in January.
In particular, the increase in mortgage loans (including jeonse loans) is also narrowing. As of the 25th, the mortgage balance at the five major banks was 608 trillion 1,913 billion won, up 519.9 billion won from the previous month. It is projected to be the smallest level in 18 months since -449.4 billion won in March last year. This is because, after two rounds of regulations, loan limits were reduced and banks stepped up total household loan volume management, including halting brokerage by loan solicitors.
But Seoul home prices are actually rising. According to the Korea Real Estate Board (REB)'s weekly apartment price trends, as of the 22nd, nationwide apartment sale prices rose 0.03% from the previous week. Seoul has been on the rise for 34 consecutive weeks. Notably, the increase widened after the Sept. 7 supply measures were announced, coming in at 0.09% on Sept. 8, 0.12% on the 15th, and 0.19% on the 22nd. Critics say the government's measures have instead stoked buying sentiment in real estate.
With no signs of the real estate market cooling, there are expectations the government will roll out additional curbs. President Lee Jae-myung said at a 100-day news conference that "if market overheating persists, we can consider follow-up regulations."
Inside and outside the financial sector, additional lending curbs are being discussed. Many viewed the lending regulations introduced in the Sept. 7 supply measures as laying the groundwork for further restrictions. With a 600 million won loan cap already in place, lowering the loan-to-value (LTV) ratio for mortgages in regulated areas (the three Gangnam districts and Yongsan District) to 40% is criticized as ineffective. The view is that this is an advance step to expand regulated areas to the Han River belt (Mapo, Gwangjin, Seongdong), among others.
The debt service ratio (DSR) could also be applied to jeonse loans. Earlier, at the time of the Sept. 7 supply measures, financial authorities said, "Expanding DSR to jeonse loans and other products is a position the government has consistently stated," adding, "We will decide on the specific timing and method of introducing DSR for jeonse loans after comprehensively considering its effects on housing stability for ordinary people."