A person surnamed Kim in her 40s, who had opened an overdraft account (minus account) with a 120 million won limit in January this year, was startled after seeing the Oct. 15 real estate measures. That is because the measures included a provision that if an unsecured loan exceeds 100 million won, the purchase of dwellings in regulated areas is prohibited for one year. Kim, who was set to sign a contract in November for an apartment in Mapo District, Seoul, was surprised and asked a bank whether this meant she would be unable to buy dwellings at all until next year. She also wondered whether, if she lowered her overdraft limit to under 100 million won today, she would be able to purchase a dwelling.
After the announcement of the Oct. 15 real estate measures, inquiries have continued about whether unsecured loan limits restrict the acquisition of dwellings. The measures announced by financial authorities only state that "borrowers with unsecured loans exceeding 100 million won will be restricted from purchasing dwellings in regulated areas for one year from the loan execution date," causing confusion over which point in time is used to determine regulated areas.
According to financial authorities on the 17th, the restriction on purchasing dwellings with unsecured loans exceeding 100 million won determines regulated-area status based on the "date the dwelling sale contract is signed." In Kim's case, whose dwelling sale contract is scheduled for November, Mapo District in Seoul falls under a regulated area at that time, barring any changes. However, because it has not been a full year since the overdraft account was opened, signing a sale contract for the dwelling is not possible until January next year. Even if Kim immediately lowers the overdraft limit to below 100 million won, the terms agreed to when the overdraft was opened remain in force, making the dwelling purchase impossible.
While this regulation may be somewhat unfamiliar, it is not newly included in the Oct. 15 measures. It was introduced in Nov. 2020 under the previous Moon Jae-in administration and has been implemented continuously to this day. Banks obtain agreements from borrowers taking unsecured loans exceeding 100 million won. The agreement includes provisions that "purchasing dwellings in regulated areas is restricted for one year. If a dwelling is purchased, the loan will be recalled." Because the agreement takes effect based on the "loan execution date," its force remains even if the outstanding loan balance is later reduced to 100 million won or less.
Until now, regulated areas were limited to the three Gangnam districts in Seoul (Gangnam, Seocho, Songpa) and Yongsan District, but starting on the 16th they were expanded to all of Seoul and 12 areas in Gyeonggi Province. As such, financial consumers planning to purchase dwellings in the greater Seoul area appear to need to pay close attention to managing unsecured loans. An official at the Financial Services Commission said, "Once you have taken out more than 100 million won in unsecured loans, you should keep in mind that even if you repay part of the loan within a year, you cannot purchase dwellings in regulated areas."
Among financial consumers, as the new administration keeps reducing loan limits, some say they should first take out the maximum in unsecured loans. On real estate community sites, workarounds are being shared, such as "Let's at least take out up to 99 million won in unsecured loans for now" and "Max out an overdraft above 100 million won, then use it to purchase dwellings after a year." However, financial authorities assess that since the earlier Jun. 27 household loan regulations limited unsecured loan ceilings to within a borrower's annual income, only some high earners will be affected by this regulation. An official at the Financial Services Commission said, "Those who can obtain more than 100 million won in unsecured loans are high earners with annual incomes exceeding 100 million won, so we do not expect the impact of the regulation to be significant."