If the financial authorities extend maturity regulations on mortgage loans for owners of multiple homes, as many as 7,500 units are expected to hit the market this year in all of Seoul and 12 regulated areas in Gyeonggi Province, including Gwacheon and Bundang.
On Apr. 5, according to the financial authorities and the financial sector, under the Apr. 1 measures, starting on the 17th, extending the maturity of apartment mortgage loans for multiple-home owners in the Seoul metropolitan area and regulated zones will be banned in principle, making about 17,000 units (4.1 trillion won) subject to lump-sum repayment at maturity. Of these, 12,000 units (2.7 trillion won) will reach maturity this year, and about 7,500 units in regulated areas account for 62.5% of the total.
Earlier, under the Oct. 15 measures last year, all 25 districts of Seoul and 12 areas in Gyeonggi Province were designated as adjustable areas and speculative overheating districts, becoming regulated zones. In regulated areas, the loan-to-value ratio (LTV) for mortgage loans was tightened to 40% from 70%, and the debt-to-income ratio (DTI) was reduced to 40%. They were also designated as land transaction permit zones that impose a two-year owner-occupancy requirement.
However, if a person without a home buys a multiple-home owner's listing by the end of the year and acquires it within four months of the permit date, the owner-occupancy requirement will be deferred until the end of the lease contract. As a result, some listings are expected to go to end users without homes.
The financial authorities are also reviewing additional measures targeting single-home owners with speculative intent. Currently, a plan to reduce jeonse loans available to non-resident single-home owners is being discussed.
Under last year's measures, jeonse loans with ownership transfer conditions for gap investing in the Seoul metropolitan area and regulated zones were banned, and the guarantee ratio for jeonse loans was lowered to 80% from 90%. In addition, the jeonse loan guarantee limit for single-home owners in the Seoul metropolitan area and regulated zones was reduced to 200 million won from 300 million won.
Because jeonse loans are based on public guarantee schemes such as Korea Housing & Urban Guarantee Corporation (HUG), Korea Housing Finance Corporation (HF), and Seoul Guarantee Insurance Company, one approach is to curb lending by further cutting jeonse loan guarantee ratios. Limiting extensions of existing loan maturities for non-resident single-home owners is likely to have limits, since most individual mortgage loans are on an amortization basis.