Yoon Seok-yeol's Pledged 'LTV Relaxation' Expected to Benefit Bank Stocks Gradually

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] As President-elect Yoon Seok-yeol pledged to ease loan regulations during his campaign, bank stocks are expected to benefit.

According to the financial investment industry on the 13th, President-elect Yoon promised to relax the loan-to-value ratio (LTV). The plan is to unify the LTV ceiling at 70% regardless of region and raise the ceiling to 80% for first-time homebuyers. Regarding real estate taxation, adjustments to the fair market value ratio, easing of comprehensive real estate tax mainly for single-homeowners, and temporary exclusion of heavy capital gains tax rates for multi-homeowners are expected to be pursued. Additionally, combined with the goal of supplying more than 2.5 million homes over five years and the possibility of revising the Lease Protection Act, the growth rate of household loans at banks is expected to rebound significantly. Although there is an analysis that benefits may be limited due to plans to regulate excessive gaps between deposit and loan interest rates, the overall expectations remain high.

Baek Doo-san, a researcher at Korea Investment & Securities, explained, "Typically, in the early stages of an administration, promises related to financial consumer protection and pricing policies are implemented, so presidential elections often have a negative impact on bank stock prices regardless of the outcome." However, he added, "This election had real estate policy as a major issue, and many easing policies in taxation, loans, and supply aspects were included in that field." He further evaluated, "Overall, this will bring slightly positive results to the banking sector."

However, there is still analysis that various variables remain regarding real estate-related policies. Sudden policy changes are not easy, and from the perspective of managing systemic risk, radical easing of loan regulations is difficult. Researcher Baek stated, "With various fine adjustments such as income and housing price requirements and differential LTV application by housing price range, household loans are expected to be managed at an appropriate pace in the medium term," adding, "The focus should be on a business cycle rebound centered on profitability improvement rather than loan growth."

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