Real Buyer LTV, Income and House Price Criteria Both Trending Upwards

Expansion of Priority Support Targets Under Review... Income Raised to 10 Million Won and House Price to 100 Million Won Discussed

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] The ruling Democratic Party and the government, which are pushing to expand the 10 percentage point preferential application of the Loan-to-Value ratio (LTV) for homebuyers who are actual demanders, are seriously considering raising both income and housing price criteria. Currently, the LTV application rate is 40% when purchasing a house in speculative or overheated speculative districts, but for non-homeowners with a combined annual income of 80 million KRW (90 million KRW for first-time buyers) or less who purchase a house priced at 600 million KRW or less (500 million KRW in regulated areas), the LTV can be applied up to 50%. Until last year, the expansion was passive, only raising the income criteria, but recently, as the party's stance has softened, they have decided to significantly lower the threshold.

On the 20th, a key ruling party official who attended a closed-door party-government meeting said on the 21st, "There was generally an opinion that the income criteria are too low," and added, "We have decided to proactively consider raising both the income criteria and housing price standards." However, he added, "This is a matter that must be finally agreed upon with related ministries such as the Financial Services Commission, Ministry of Economy and Finance, and Ministry of Land, Infrastructure and Transport."

This policy is significantly different from last year. In July last year, the government raised the income criteria by more than 10 million KRW through a plan to ease income standards for low-income and actual demanders as preferential LTV recipients. However, due to recent house price increases, criticism arose that many could not receive the 10 percentage point preferential treatment because they exceeded the housing price criteria, prompting a review of this aspect.

With the median price recently surpassing 900 million KRW, there is talk of raising the housing price criteria by at least 100 million to 200 million KRW. A government official said, "We cannot revise the policy by only looking at Seoul," and added, "In other regions including Gyeonggi Province, a sale price of 700 million to 800 million KRW is a feasible level." Even though the median price in Seoul has exceeded 900 million KRW, adding 300 million KRW to the current 600 million KRW standard is considered excessive. A lawmaker who attended the party-government meeting explained that the Financial Services Commission also showed a positive stance, saying, "They will consider it proactively."

Some have proposed raising the current income standard of 80 million KRW to over 100 million KRW. However, there are counterarguments that it is difficult to judge whether such earners can be considered low-income, so the additional increase is likely to be limited.

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