8 out of 10 Koreans Say "LTV Expansion Needed for Actual Homebuyers"

Financial Services Commission, General Public and Expert Survey Results
66.6% of Respondents Say "Sufficient Loans Should Be Provided to Non-Homeowners"

[Asia Economy Reporter Kim Jin-ho] In a recent public opinion survey conducted by financial authorities, 8 out of 10 South Korean citizens agreed that housing purchase benefits should be increased only for the non-homeowners and genuine demanders. Given that the Democratic Party of Korea has proposed raising the loan-to-value ratio (LTV) limit to 90% for genuine demanders, there is significant interest in the survey results.

According to the financial sector on the 16th, the Financial Services Commission recently conducted a public opinion survey related to household debt. The survey was carried out by Gallup Korea from February 24 to March 5, targeting 600 general citizens and 120 experts.

The survey results showed that both the general public and experts agreed on the need to expand support for housing purchases by non-homeowners and genuine demanders, emphasizing the necessity of sufficient loans. 83.7% of respondents answered that an additional 10% LTV benefit should be granted on the current mortgage loans.

Currently, non-homeowners with an annual income of 80 million KRW (90 million KRW for first-time homebuyers) and those purchasing homes exceeding 600 million KRW in speculative or overheated speculation areas (500 million KRW in regulated areas) are subject to relaxed regulations with an additional 10 percentage points in LTV.

Additionally, 66.6% of respondents said sufficient loans are necessary for non-homeowners. By age group, the highest responses supporting the need for loans were from those in their 20s (77.9%) and 40s (72.3%).

"61.2% of respondents find current loan regulations appropriate"

Regarding the appropriateness of current loan regulations for stabilizing the housing market, most respondents considered them adequate. 61.2% of respondents evaluated the LTV limit of 40% as appropriate for housing market stability. However, among homeowners aged 50 and above, 73% found the regulations appropriate, significantly higher than the 50% of those aged 40 and below. This indicates that homeowners tend to view current loan regulations as suitable.

Regarding the regulation banning mortgage loans on luxury apartments priced over 1.5 billion KRW, 65.8% of respondents answered that it is appropriate.

Furthermore, in the perception survey conducted only among experts about the 'speed of household debt increase,' most evaluated the current 8% rate of increase as rapid. However, 87% agreed that active lending is necessary to respond to COVID-19.

Regarding the appropriate household debt growth rate for this year, many responded that it is necessary to allow household debt expansion, followed by levels similar to pre-COVID times and GDP growth rates. Among loans requiring management of household debt growth, unsecured loans were overwhelmingly high.

Meanwhile, according to political circles, the ruling party’s real estate special committee on taxation and finance is discussing plans to significantly ease loan regulations for youth and newlyweds. While limiting LTV to 40% in speculative and overheated speculation areas, they propose applying 70% of the non-regulated area rate exclusively to non-homeowner youth groups. Additionally, by introducing ultra-long-term mortgages not currently handled by financial institutions and applying a 20% preferential benefit, it is expected that financing up to 90% of the house price will be possible.

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