The First Day of Jeonse Loan Regulations... "There Are No Clear Guidelines Yet, Dear Customer"

Over 900 Million Won Homeowners' Jeonse Loan Restrictions
Bank Paralysis Due to Overwhelming Calls on First Day
Real Estate Cafes Flooded with Inquiries
Experts Warn of Side Effects from High-Interest Rate Shift

[Asia Economy reporters Kangwook Cho and Donghyun Choi] "It is difficult to provide an answer as clear guidelines have not yet been issued. Please inquire again after the Lunar New Year holiday." This was the response Mr. A received when he called a bank to ask about the possibility of extending his jeonse loan. He added, "I called the Financial Services Commission, but I couldn't get through even after more than 30 minutes."

According to major banks on the 21st, the frontline loan counters appeared superficially quiet on the first day of the implementation of the jeonse loan restrictions for homeowners with properties exceeding 900 million KRW on the 20th. However, the reality was different. Calls asking about the strengthened loan regulations continued throughout the day. Especially branches located in Gangnam District and Yangcheon District in Seoul, where high-priced apartments are concentrated, were overwhelmed with phone inquiries, making it impossible to handle other tasks. A representative from Bank A's Daechi-dong branch in Gangnam-gu said, "So far, there have been no new consultations," but added, "Calls regarding the possibility of extending the term for existing jeonse loan customers have been nonstop." The bank explained that some customers, whose new loan options were blocked, also inquired about other ways to cover their funding shortfalls. An employee at Bank B's Seocho-dong branch said, "There have been many inquiries from tenants who have already signed jeonse contracts asking whether loans can proceed, reflecting significant anxiety among customers."

In particular, some customers were reportedly confused because, due to the loan-to-value (LTV) restrictions, even though they wanted to move into their owned homes, they could not borrow the deposit to return to tenants. In the worst cases, they ended up having to live in monthly rent for a while or even dispose of their homes, effectively giving up moving in. Because of this, a national petition requesting that the LTV limit for jeonse deposit return loans for one-homeowners before the December 16 regulations be set at 40% was submitted to the Blue House the day before.

Voices of concern over the jeonse loan restrictions also continued on online communities such as real estate cafes. On that day, nearly 100 posts asking about new jeonse loans or extensions were posted on the 'Real Estate Study' cafe with 920,000 members and the 'Beautiful My Home Ownership' cafe with 800,000 members. Many posts expressed frustration at not receiving clear answers from banks or financial institutions. Mr. B said, "I took out a jeonse loan and signed a housing sales contract before the regulation took effect on the 20th, but I was told the loan extension was denied because the registration was done after the 20th," and argued, "Requiring registration completion only for sales contracts is unfair."

Meanwhile, high-interest loan businesses exploiting the anxiety of demanders blocked from loans are also thriving. Most posts related to jeonse loans had comments such as "Loans available. Please send a message," "Special interest rate discount event ongoing. Contact me via KakaoTalk," and "We can arrange up to 80% jeonse loans." Visiting the website linked by a loan company called '00 Financial Group' revealed promotions offering to raise the housing loan-to-value ratio (LTV) from 60% to 80% even in regulated areas as a special limit sale. Comments recommending P2P loans were also frequently observed.

Professor Shim Kyo-eon of Konkuk University's Department of Real Estate said, "It has been confirmed by various studies that when the government tightens loan regulations, the middle class tends to switch to high-interest, high-risk loan businesses," adding, "The comprehensive loan restrictions applied to both speculative investors and genuine demanders are expected to cause additional side effects."

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