"Wave of National Petitions: Dream of Homeownership Shattered by Group Loan Regulations (Comprehensive)"

Real Demanders' Financing Plans Disrupted... Financial Authorities Likely to Maintain Strict Regulations

Apartment complexes in the Samseong-dong and Cheongdam-dong areas of Gangnam-gu, Seoul (Photo by Yonhap News)

[Asia Economy Reporter Kwangho Lee] "It’s been 11 years since the apartment pre-sale, and now that move-in is here, are real demand buyers supposed to die if group loans are blocked?" "Please lift the group loan restrictions." "My dream of buying a home for the first time in my life is shattered. I’m crying because group loans are blocked."

Due to financial regulations imposed by financial authorities to manage household loans, real demand buyers preparing to purchase homes are facing repeated disruptions in their financing plans, leading to a flood of complaints on the Blue House’s public petition website.

"Are real demand buyers supposed to die if group loans are blocked?"

According to the Blue House public petition website on the 29th, a post titled "It’s been 11 years since the apartment pre-sale, and now that move-in is here, are real demand buyers supposed to die if group loans are blocked?" was uploaded on the 27th. As of 2:40 PM that day, the petition had 3,054 participants.

The petitioner, Mr. A, who identified himself as a head of household in his late 40s with two children, began by saying, "In October 2010, I submitted a pre-sale application for an apartment in the OO district of Hanam, Gyeonggi Province, promoted by LH (Korea Land & Housing Corporation), qualifying as a first-time homebuyer, and was selected in December 2010." He then explained, "At the time of the pre-sale announcement, Hanam’s OO district was a non-regulated area with no residency requirements or resale restrictions, and bank loans such as Loan-to-Value (LTV), Debt-to-Income (DTI), and Debt Service Ratio (DSR) were unrestricted up to 80%."

Mr. A continued, "The main sale for the OO district, which had its pre-sale in 2010, was held on December 31, 2018, and the main contract was signed in March 2019." He raised his voice, saying, "During those eight years, the OO district changed from a non-regulated area to a speculative overheated district, resale restrictions and mandatory residency periods were introduced, and strong bank loan restrictions were imposed." He added, "After nearly 11 years, the apartment was newly built, and the first move-in began on October 27, 2021, but at this time, the Financial Services Commission reduced the loan limits." He appealed, "For ordinary people who are just now trying to get a loan to pay the balance, this is like a bolt from the blue. It sounds like they are telling the poor not to move in and to die on the streets."

Furthermore, he lamented, "I am currently living in a house with a bank rental deposit loan, but due to strengthened DSR and LTV regulations, the rental loan is counted as debt, so I cannot get a group loan limit." He added, "The balance must be fully paid by December 2021, and unless I repay the rental loan, I cannot get a mortgage loan limit, so I have to forcibly withdraw the rental deposit from my current residence to get the mortgage loan limit." Above all, he expressed frustration, "I will be forced to travel dozens of kilometers every day for my elementary school children’s commute."

"I can’t sleep, no solution but to abandon the pre-sale rights"

Besides Mr. A, there are many similar posts on the Blue House public petition board. Mr. B, who introduced himself as having won a subscription in a city in the metropolitan area last February and is scheduled to move in around mid-next year, posted on the 27th, "Please lift the group loan restrictions." Mr. B said, "After reading the shocking news about blocking group loans, my heart is heavy, and I don’t know what to do. I can’t sleep because there is no solution whether I should abandon the pre-sale rights." He reflected, "I thought it was great to crack down on speculators by tightening regulations on homeowners, but seeing the current regulations, I feel like I’m watching my future self worrying and suffering over loan trends rather than happily preparing for the upcoming move-in."

Also, Mr. C posted on the 17th, "My dream of buying a home for the first time in my life is shattered. I’m crying because group loans are blocked." He expressed, "I was considering group loans, but after hearing the shocking news that loans are being blocked, my heart is heavy and I can’t sleep. Please do not block loans for residents regardless of limits."

In addition, posts such as "Request to lift mortgage loan restrictions for one-home actual residents" and "What is going on with mortgage loans?" have been posted.

Financial authorities to continue strong measures step-by-step

Despite these appeals from real demand buyers, financial authorities have stated that they will continue to implement strong measures step-by-step until the effects of the measures become apparent, so the damage is expected to increase further.

Following NH Nonghyup Bank, KB Kookmin Bank is also drastically reducing loan limits starting today. As of the 23rd, Kookmin Bank’s household loan balance was 168.8297 trillion won, a 4.31% increase from the end of last year (161.8557 trillion won). After Nonghyup Bank (7.33%) already exceeded the financial authorities’ household loan management target for this year (annual increase rate of 5?6%), even Kookmin Bank, which has the largest loan scale, has reached its limit.

Professor Sung Tae-yoon of Yonsei University’s Department of Economics advised, "From the perspective of real demand buyers, blocking bank loans may push them toward secondary financial institutions or private loans, so loans should not be blocked." He added, "Low-credit borrowers should be supported through fiscal aid in the form of policy funds."

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