After the government strictly tightened lending, it is preparing measures as pushback has emerged on the ground and President Lee Jae-myung ordered fixes.
According to the financial authorities on the 24th, the Financial Services Commission is reviewing the measures mentioned at the real estate policy grand debate presided over by President Lee Jae-myung the day before. At the debate, citizens and experts repeatedly voiced concerns about the side effects of regulations, and the president and officials from the Ministry of Economy and Finance and the financial authorities said they would "identify more exceptional cases and resolve them."
First, balance loans for dwellings contracted before the regulations are expected to become possible. An incoming resident who said they were allotted an apartment in Suwon two years ago for actual residence said moving in had become difficult because the government's regulations blocked the balance loan.
In response, the president said, "If a policy is changed after something is already finalized, absurd situations can occur. We need to minimize the number of people who get hurt at the margins." Lee Eog-weon, chair of the Financial Services Commission, who attended the debate, said, "Individual banks have further tightened (loans) on their own, closing off even areas that originally could proceed. We will keep discussing and look into it."
The issue that people who inherited equity in dwellings cannot receive first-time-buyer benefits is also expected to be improved. One attendee said, "Because I inherited equity in a dwelling when my father died while I was a minor and later disposed of it, I was not recognized as a first-time buyer and was excluded from the 70% LTV (loan-to-value ratio) benefit."
The president said, "It is hard to overhaul the entire rules, but such extremely exceptional cases must be remedied. We will consider introducing a system like a citizens' committee to provide exceptional relief."
Side effects of bundling local regions and the greater Seoul area together under the same lending curbs were also pointed out. Currently, both local regions and the greater Seoul area are subject to a 40% debt service ratio (DSR) and a stress DSR. One attendee requested, "Separate local regions and designated adjustment areas, and exclude local regions." In response, the president said, "This is a suggestion to segment policy with concrete justification," adding, "We need to segment (policy) in a pinpointed way."
A plan to reduce capital gains tax for those who move to local regions outside the greater Seoul area could also be pursued. The president said, "I also understand the view that says, 'I paid 500 million won in my younger years because I really intended to live there, but why tell me to pay more tax after policy mistakes pushed (the home price) up to tens of billions of won.' There could also be a view that says, 'If they move to regions outside the greater Seoul area, let's sharply cut capital gains tax.'"
Jeonse deposit loans are likely to be tightened further. The president said, "Making jeonse loans easy was a major cause of the surge in home prices and jeonse fraud. We should be cautious about expansion, and we should also impose somewhat stricter limits on what already exists." However, for young people, newlyweds, and first-time jeonse borrowers, he left room, saying, "We will provide support with concrete justification."
The debate that day became an occasion to identify the side effects caused by the government's lending curbs and to create exceptions. The president said, "When you make general regulations, many gaps emerge. Even if it is difficult and increases the workload for policymakers, it is right to segment policies to fit the circumstances."