Post-Lunar New Year Measures on Jeonse Loan Regulations Focus on Gap Investment Exceptions and Closing Loopholes

Reference image (Source=Yonhap News)

[Asia Economy Reporter Kim Hyo-jin] Attention is focused on the follow-up measures for jeonse loan regulations that the financial authorities will soon announce. The focus is expected to be on maximizing the effectiveness of the regulations by minimizing exceptions to the jeonse loan restrictions introduced in the December 16 real estate measures last month.

According to the government and financial sector on the 11th, the financial authorities are in the final stages of coordinating to implement follow-up measures on jeonse loan regulations within this month.

The financial authorities are reportedly planning to include a provision that if the price of a house owned and rented out as jeonse exceeds 900 million KRW, one will not be able to receive new jeonse loans or extend existing jeonse loans while living in another rented jeonse house.

Additionally, if a person living in a jeonse house purchases a house priced over 900 million KRW on their own accord without special circumstances or becomes a two-home owner, the plan will not allow exceptions even for reasons such as job transfers or education, and will require the recall of jeonse loans.

If one needs to move residence for such reasons, they could live in a jeonse or monthly rent house at the new location. Purchasing a high-priced house is judged to be an investment or speculative act considering the capital gains from rising house prices. This reflects the intention to further reduce the possibility of gap investment, which involves buying high-priced houses with jeonse loans.

The financial authorities plan to apply these measures starting from new loans after the revision of the guarantee institutions' internal regulations. A financial authority official said, "The premise is to minimize the possibility of speculation through gap investment as much as possible," adding, "We are proceeding with the procedures to implement this within this month, preferably before the Lunar New Year holiday."

Meanwhile, according to the 'December 2019 Household Loan Trends (Preliminary)' announced by the financial authorities the day before, household loans across all financial sectors increased by 7.6 trillion KRW in December last year. This is 1 trillion KRW more than the same period last year (6.6 trillion KRW).

Household loans in the banking sector led the increase with a rise of 7.2 trillion KRW. This is 1.8 trillion KRW more than the same period last year (5.4 trillion KRW) and 200 billion KRW more than in November (7 trillion KRW).

In particular, housing mortgage loans in the banking sector expanded by 5.6 trillion KRW. The financial authorities analyzed that the increase in bank housing mortgage loans was due to the conversion of second-tier financial sector housing loans to first-tier financial sector loans through the Anshim Conversion Loan (900 billion KRW), the increase in demand for the Bogeumjari Loan (2.2 trillion KRW), and the rise in jeonse loan demand (2.5 trillion KRW).

This content was produced with the assistance of AI translation services.