[Financial Microscope] No 'Number of Properties Owned' in Bank Systems... Statistical Challenges in Multi-Homeowner Regulation

Scope of Review Expanded to Include Rental Business Owners and Corporations

Individual Verification Method Considered for Loan Extensions

Authorities: "Policy Effectiveness to Be Judged Comprehensively"

Although financial authorities have announced a comprehensive overhaul of real estate loan statistics and signaled tighter lending regulations for multiple homeowners, the fundamental statistical work that forms the basis of policy design is proving difficult because banks’ systems cannot accurately tally the number of homes owned by each borrower.

According to the Financial Services Commission on March 4, the Commission held its fourth Real Estate Loan Review Meeting the previous day, chaired by Vice Chairman Kwon Daeyoung, where additional regulatory measures were discussed. Financial authorities have been conducting a full review of loan documents from both banks and secondary financial institutions, reclassifying borrower types, collateral structures, and regional distributions. The goal is not just to check statistics, but to identify the actual number of borrowers who would be affected when new regulations are implemented.

The core issue is the statistics that serve as the starting point for policy design. The banking sector maintains that it has already been managing multiple-homeowners for standard personal mortgage loans. Banks have long applied differentiated loan-to-value (LTV) ratios and required borrowers to make declarations that the loan is not for purchasing additional properties, thereby controlling the purpose of the loan.

However, loans to individual business owners are screened based on business purposes. In addition, the number of homes owned by corporate loan borrowers is not a mandatory entry in banks’ systems. While information such as the location or type of collateral property can be checked, it is difficult for the system to capture the total number of properties owned by a borrower.

In fact, according to Statistics Korea, as of 2023, only about 415,000 people reported residential rental income to the National Tax Service. Given that the number of people owning two or more homes reaches about 2.3 million, and there are also a considerable number of people who own three or more homes, the proportion of multiple-homeowners reporting rental income remains low. This is why some point out that, without securing sufficient core data, it will be challenging to predict the policy’s impact in advance if regulations are implemented.

In response, the banking sector is considering supplementary measures during the loan maturity extension review process. One approach being discussed is to individually verify the number of homes owned by a borrower when they apply for an extension. Especially in the case of registered rental business operators, banks explain that there is already a system in place to confirm property holdings through linkage with the Ministry of Land, Infrastructure and Transport’s system during loan maturity extension reviews, allowing verification of multiple-homeownership at this stage.

It was also reported that recent meetings raised the issue of differences in how each bank calculates statistics. Prior to the recent meeting, financial authorities reportedly asked banks to submit basic status data on rental business operator loans. The data requested focused on the outstanding balance of loans to rental business operators secured by apartments (including both individuals and corporations), broken down by Seoul metropolitan area versus non-metropolitan areas, along with the scale of loans maturing this year.

However, concerns have been raised that, even for identical items, results can differ depending on each bank’s internal criteria, potentially causing confusion in policy impact analysis. As a result, the meeting reportedly discussed ways to further specify the criteria for calculating statistics and apply them consistently. A commercial bank official said, “Detailed directions have yet to be fully clarified, so further internal review is needed. We are working on statistics while checking the authorities’ guidelines.”

To address these issues, the Financial Services Commission is considering asking the Ministry of the Interior and Safety for cooperation with relevant information, such as access to the resident registration database. The idea is that, since it is difficult to fully identify the status of rental business operators using only internal bank data, information-sharing with the Ministry, which holds local tax data, should be considered.

Despite these limitations, financial authorities maintain that policy design will not be disrupted. An official said, “The relevant data has already been updated according to standards, and major figures have been reviewed. Policy decisions are not based solely on simple statistics, but are promoted based on a comprehensive assessment of market impact and policy effectiveness.”

Authorities also believe that, in the process of improving statistics, the scope of review should be expanded to include not only individual rental business operators but also corporate ones. In particular, they are working to identify cases where borrowers classified as non-residential rental business operators also own apartments in the Seoul metropolitan area.

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