Starting Today, Weekly DSR 40% Enforcement... 83.5% of Seoul Apartments Affected

Maximum 20%P LTV Preference Increase by 10%P for Non-Homeowners
Youth and Newlyweds Eligible for 40-Year Maturity Policy Mortgage

A view of an apartment complex from the Seoul Sky observation deck at Lotte World Tower in Songpa-gu, Seoul. (Photo by Yonhap News)

[Asia Economy Reporter Kwangho Lee] In regulated areas such as Seoul, when taking out a mortgage loan on a house priced over 600 million KRW or a credit loan exceeding 100 million KRW, a total debt service ratio (DSR) of 40% will be applied.

Additionally, the preferential loan-to-value ratio (LTV) for mortgage loans available to non-homeowners purchasing a house will increase by up to 20 percentage points, 10 percentage points more than before. Young adults and newlyweds can use policy mortgages with a 40-year maturity.

According to financial authorities on the 1st, the application of borrower-level DSR will be gradually expanded from this day forward. DSR refers to the ratio of total financial loan principal and interest repayments to income. For example, if the annual income is 50 million KRW and the annual loan principal and interest repayment is 20 million KRW, the DSR is 40%.

In Seoul, virtually all apartments are subject to DSR regulations. As of February, 83.5% of apartments in Seoul exceeded 600 million KRW.

From July next year, DSR regulations will apply to borrowers whose total loan amount exceeds 200 million KRW. By July 2023, DSR regulations will be fully applied to all borrowers with total loans of 100 million KRW or more.

Along with this, mortgage loan regulations will be eased to ensure that the housing ladder for non-homeowners and low-income real demanders is not broken. The LTV preferential margin will be expanded from 10 percentage points to 20 percentage points, and the income criteria for receiving mortgage loan preferential conditions will be lowered.

For non-homeowner household heads purchasing a house, the LTV will be expanded up to 60% (previously 50%) in speculative and overheated districts including Seoul, and up to 70% (previously 60%) in regulated areas.

The house price criteria for receiving LTV preferential benefits will also be relaxed from 600 million KRW to 900 million KRW (in regulated areas from 500 million KRW to 800 million KRW), and the income criteria will be widened from a combined couple income of 80 million KRW or less to 90 million KRW or less (for first-time buyers, from 90 million KRW to 100 million KRW).

However, the maximum loan limit is restricted to within 400 million KRW. This means that even if the LTV limit allows for more than 500 million KRW, the loan amount cannot exceed 400 million KRW.

Furthermore, young adults aged 39 or younger and newlywed couples married within 7 years can use policy mortgages (such as Bogeumjari Loan and Qualified Loan) with a 40-year maturity.

This product extends the current maximum policy mortgage maturity of 30 years by 10 years, reducing the monthly principal and interest repayment burden.

The Bogeumjari Loan requirements (house price 600 million KRW, income 70 million KRW) apply. Qualified loans have no income requirements and can be used if conditions such as a house price of 900 million KRW or less are met.

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