Tightening Home Loans... Autumn Real Estate Market Panic

New Loan Suspension Pushes Ordinary People to the Brink

Some banks, including NH Nonghyup, have stopped issuing new loans, raising concerns among actual borrowers. / Photo by Getty Images Bank

"If you need to pay off your mortgage loan within the next three months, it would be better to secure the loan in advance. Currently, only some banks like NH Nonghyup have stopped issuing new loans, but it is expected that other banks will soon take similar measures."

On the 23rd, online real estate communities were flooded with posts expressing concerns about the suspension of mortgage and jeonse (long-term deposit) loans in the financial sector ahead of the autumn moving season. Nonghyup Bank announced that it will stop issuing new mortgage loans until the end of November after processing applications on that day, and Woori Bank and SC First Bank also announced restrictions or suspensions on some loan products, raising fears that other banks will have no choice but to follow suit.

End users are in panic. Mr. A, an office worker who signed a semi-jeonse contract to move into an apartment in Seodaemun-gu, A Apartment, in September, said, "Because of the news that loan regulations are tightening, all my attention is focused on this, and I can't concentrate on anything else." He added, "I plan to take a day off immediately and visit the bank for consultation."

An official from a commercial bank said, "Nonghyup is the only bank that has completely stopped new mortgage loans, but due to the 'balloon effect,' it is obvious that other banks' loan growth rates will increase," adding, "Each bank branch is receiving a flood of inquiries about loans ahead of the moving season."

On the same day, analyst Yoon Won-tae from SK Securities also commented on the banks' loan suspension announcements, saying, "From the perspective of customers planning or intending to execute loans, if some banks stop issuing loans, they have no choice but to consider other banks," and "If other banks maintain the current household loan growth rate, it is expected that loan limits will be exhausted by the third quarter of this year."

Even public sale apartments supplied by the government at prices below market value are in a panic due to loan regulations. A representative example is 'Lin Famillier' in Gwacheon Knowledge Information Town, Gwacheon-si, Gyeonggi-do, which started accepting applications that day. Since it is a public sale, strict asset and income criteria apply. The value of owned vehicles must not exceed 34.96 million KRW, and real estate assets (buildings + land) must not exceed 215 million KRW. Regarding income criteria, for special newlywed supply, if the spouse has income, it must not exceed 140% (8.44 million KRW) of the average monthly income of urban workers per household. Even dual-income couples working at major corporations often do not meet the eligibility requirements.

The problem is that due to accumulated loan regulations, the sales market might end up allowing only the 'gold spoon' class to move in. The developer stated in the recruitment announcement, "Due to the collective mid-term payment loan regulations in the financial sector, mid-term payment loans are currently uncertain," and "If collective mid-term loans are not possible, purchasers must pay the mid-term payments on their own." In the worst case, this means preparing the full amount of 860 million KRW in cash for an 84㎡ unit. Mr. B, an office worker, said, "I can't understand why they set both income and asset criteria and then block loans," questioning, "How many young people can afford to buy a house with nearly 900 million KRW in cash?"

Seo Jin-hyung, president of the Korea Real Estate Society (professor at Gyeongin Women's University), said, "Under the current circumstances, to secure a house, one must either invest 100% of their own funds or raise funds through high-interest private loans from others," adding, "However, with the real estate transaction freeze worsening and risks increasing, the concerns of non-homeowners and genuine buyers will inevitably deepen."

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