With Dongtan District in Hwaseong, Giheung District in Yongin, and Guri designated as regulated area, the mortgage loan limit in these areas will be cut to 40% from 70% starting tomorrow. The financial authorities said they would conduct on-site inspections of financial companies that continue to miss household loans management targets.
On the 30th, the Financial Services Commission held a joint "household liability review meeting" chaired by Secretary-General Shin Jin-chang to discuss stronger lending curbs following the additional designation of regulated area. The Ministry of Land, Infrastructure and Transport, the Bank of Korea, the Financial Supervisory Service, the Korea Federation of Banks, associations of the secondary financial sector, and the five major commercial banks attended.
The meeting served as a follow-up step after the Ministry of Land, Infrastructure and Transport additionally designated Dongtan District in Hwaseong, Giheung District in Yongin, and Guri as speculative overheating districts and adjustment target areas. The financial authorities noted that while volatility in dwellings prices has been rising in some areas, centered on the semiconductor belt, they assess that the new regulated area designation will partially cool the overheated market.
In the newly designated regulated area, the LTV will be lowered to 40% from 70% starting on the 1st of next month. However, first-time homebuyers and policy mortgages will be subject to an eased LTV ratio of 60%–70%. For owners of multiple homes, the LTV for mortgage loans for the purpose of purchasing dwellings in the Seoul metropolitan area remains 0%, regardless of whether the area is regulated.
If a borrower (the person taking the loan) holding a jeonse loan acquires an apartment over 300 million won in a regulated area or newly acquires an apartment over 300 million won within a regulated area, the jeonse loan will be restricted. Exceptions apply when, for example, a sales contract was signed before the 1st of next month.
Regulations will also apply to interim payment and relocation expense loans and to business loans. If a one-home owner within a regulated area receives interim payment or relocation expense loans due to reconstruction or redevelopment of the dwelling, additional home purchases are restricted. Business operators other than those engaged in dwellings sale or lease businesses cannot receive business loans for the purpose of purchasing dwellings within regulated area.
For borrowers who completed electronic loan application intake in financial companies or who signed a home sales contract and proved payment of the deposit by today, the day before the regulated area takes effect, the previous rules will apply.
Secretary-General Shin Jin-chang said, "Recently, household liability has continued to rise, centered on other loans," adding, "Through thorough market monitoring, we plan to respond more proactively, including through on-site inspections when necessary, to financial companies that continuously fail to meet management targets."