Regulation Changes Announced Including 'Allowing Mortgage Loans in Multi-Housing Owner Regulation Areas'

Effective from March 2

[Asia Economy Reporter Sim Nayoung] The Financial Services Commission announced on the 10th that it will conduct a public notice of regulatory changes to the supervisory regulations for each financial sector (banks, insurance, savings, credit finance, mutual finance) by the 20th of this month to allow mortgage loans within regulated areas for multi-homeowners. The implementation date is set for the 2nd of next month. This was announced during the 3rd Real Estate Ministers' Meeting held last November and the Financial Services Commission's work report this year.

First, mortgage loans will be allowed for multi-homeowners within regulated areas. Currently, mortgage loans for the purpose of purchasing homes within regulated areas are prohibited for multi-homeowners. Going forward, mortgage loans for multi-homeowners purchasing homes within regulated areas will be permitted. The loan-to-value ratio (LTV) for mortgage loans in regulated areas will increase from 0% to 30%, and in non-regulated areas, it will expand up to 60%.

Mortgage loans will also be allowed for rental and sales business operators. Until now, mortgage loans for housing rental and sales business operators were prohibited in all areas. However, going forward, mortgage loans for housing rental and sales business operators will be permitted.

Various restrictions, including the loan limit of 200 million KRW for apartments exceeding 1.5 billion KRW in speculative and overheated areas and mortgage loans for the purpose of returning rental deposits, will be uniformly abolished. Loans can be obtained within the limits of LTV and debt service ratio (DSR).

Additionally, ▲the limit on mortgage loans for living stabilization funds will be abolished ▲when refinancing, the DSR at the time of the existing loan will be applied to prevent reduction of the existing loan limit due to interest rate hikes and strengthened DSR regulations (one-year temporary measure, no increase allowed) ▲the loan limit for mortgage loans for home purchases by low-income and genuine demanders within regulated areas will be abolished (loans can be handled within the limits of LTV and DSR) will be implemented.

A Financial Services Commission official stated, "To quickly restore genuine demand transactions in the real estate market, the amendment of supervisory regulations for five business sectors, including bank supervision regulations, will be promoted with the goal of Financial Services Commission approval on the 2nd after the public notice of regulatory changes."

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