No Application of 'Individual DSR Regulation' on Mid-term and Final Payments for Pre-sale in July

Financial Services Commission Issues Administrative Guidance Letter on Household Loan Risk Management Standards

[Asia Economy Reporter Oh Hyung-gil] Loans for moving expenses, interim payments, and balance payments for projects that have announced tenant recruitment by the 30th of this month are not subject to the personal Debt Service Ratio (DSR) regulations (40% for banks, 60% for non-banks).

According to financial authorities on the 13th, the Financial Services Commission announced an administrative guidance on household loan risk management standards containing this content. This administrative guidance is a follow-up measure to the household debt management plan announced by the financial authorities on April 29.

DSR is an indicator that calculates the principal and interest repayment burden for all personal loans during loan screening. It reflects the principal and interest burden of all financial sector loans, including mortgage loans, credit loans, and card loans.

According to the plan, from July, the personal DSR 40% application target will be expanded to houses priced over 600 million KRW in all regulated areas (speculative areas, speculative overheating districts, and adjustment target areas). Currently, personal DSR 40% is applied to loans secured by houses priced over 900 million KRW in speculative areas and speculative overheating districts.

When announcing the household debt management plan, the financial authorities did not separately explain whether there would be transitional measures for apartments where subscription has already ended. Because of this, many posts on real estate-related online communities expressed concerns that the expanded personal DSR regulations from July would cause difficulties in obtaining balance payment loans.

Through this administrative guidance announcement, the financial authorities clearly stated, "For projects that have conducted tenant recruitment announcements by the 30th (if there is no tenant recruitment announcement, then construction commencement report, and for reconstruction/redevelopment project union members, management disposition approval), loans for moving expenses, interim payments, and balance payments can apply the previous regulations."

However, if the pre-sale rights of projects already announced are transferred from the administrative guidance enforcement date of July 1, the strengthened regulations will apply.

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