From December 1, LTV in regulated areas raised to 50%... 70% for low-income and genuine buyers

Mortgage Loans Allowed for Purchase of Apartments Exceeding 1.5 Billion KRW in Speculative and Overheated Speculative Districts

[Asia Economy Reporter Sim Nayoung] The Financial Services Commission announced that starting from the 1st of next month, the loan-to-value ratio (LTV) for mortgage loans will be unified and raised to 50%, differentiated by region and housing price within regulated areas. Mortgage loans will be allowed for purchasing apartments priced over 1.5 billion KRW in speculative and speculative overheated districts. For low-income and genuine demand borrowers within regulated areas, preferential LTV up to 70% will be available within a maximum limit of 600 million KRW.

The Financial Services Commission conducted a public notice on the amendment of supervisory regulations on the 10th to implement the announcements made at the 11th Emergency Economic and Livelihood Meeting and the 3rd Real Estate Related Ministers' Meeting.

Currently, LTV regulations are applied differentially based on home ownership, regulated areas, and housing prices, but going forward, the LTV will be unified at 50% for non-homeowners and one-homeowners (conditional on disposing of existing homes) within regulated areas. Multi-homeowners will maintain the current regulations.

Mortgage loans for apartments priced over 1.5 billion KRW will also be permitted. Previously, mortgage loans for purchasing apartments priced over 1.5 billion KRW in speculative and speculative overheated districts were prohibited, but now mortgage loans for apartments priced over 1.5 billion KRW will be allowed for non-homeowners and one-homeowners (conditional on disposing of existing homes) within speculative and speculative overheated districts. The LTV will be applied up to 50%.

The loan limit for low-income and genuine demand borrowers* will be expanded (from 400 million KRW to 600 million KRW), and the preferential LTV margin for home purchase purposes within regulated areas will be unified at 20 percentage points. The LTV will be allowed up to a maximum of 70%. The criteria for low-income and genuine demand borrowers are ▲ combined annual income of a couple below 90 million KRW ▲ housing price in speculative and overheated areas below 900 million KRW (below 800 million KRW in adjusted target areas) ▲ and meeting all requirements such as being a non-homeowner household head.

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