Shinhan Bank Expands Nationwide Restriction on Conditional Jeonse Loans to Curb Gap Investment

Shinhan Bank will restrict the use of "jeonse loans with conditional ownership transfer" for gap investment in regions outside the Seoul metropolitan area until October. This is a preemptive measure to manage loans in line with the government's policy to regulate the total volume of household lending.

On August 4, Shinhan Bank announced, "We will temporarily restrict certain conditional jeonse loans until October."

Accordingly, the restriction on jeonse loans with conditional ownership transfer, which had previously applied only to the Seoul metropolitan area and regulated regions, will be expanded nationwide. This type of jeonse loan is often used for gap investment, where a homebuyer uses the jeonse deposit to pay for the purchase price or the remaining balance on a new property. The government first applied this restriction to the Seoul metropolitan area at the end of June, after observing signs of overheating in the real estate market.

Shinhan Bank will also restrict conditional loans (with the requirement to cancel or reduce senior liens) where the tenant's jeonse loan is used to repay the landlord's debt. Jeonse loans for those who own more than one home will also be restricted, and the loans will not be provided for refinancing loans from other banks. Loans will also be restricted when the condition is to dispose of an existing property.

These loan restrictions will take effect starting August 6. However, contracts signed and deposits paid before that date will be exempt. In addition, exceptions may be made after review for cases such as job relocation, children's education, or medical treatment. Even for cases that do not meet the exception criteria, a "dedicated team" will be operated to minimize inconvenience for consumers.

Among mortgage loans and jeonse loans, products with a six-month variable interest rate will be temporarily suspended starting August 8. This is to change the benchmark rate for these products from the current six-month COFIX (Cost of Funds Index) to financial bonds. The purpose is to reflect daily changing interest rates in a timely manner during a period of falling rates. The bank plans to resume these loans after completing the necessary system updates and procedures.

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