Mortgage rules loosen as market slowdown threatens economy

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South Korea will ease lending rules for the metropolitan area and those looking to buy their first homes in the metropolitan area from Dec. 1 to prevent a slowdown in the real estate market caused by rising interest rates from hurting economic growth. increase.

Such homebuyers can borrow up to 50% of their property value from the currently approved low of 20%, and more, according to an interagency government meeting led by the Treasury Department on Thursday. You can take out a mortgage on valuable real estate. The 1.5 billion won ($1.09 million) is seen by many as a deregulation move to restore demand.

The capital, Seoul, and its surrounding areas, including Incheon and Gyeonggi Province, home to about half of its 52 million population, have been at the center of strong real estate regulation over the past five years. A limit introduced to curb the surge in housing prices by removing a “speculation bubble”.

Restrictions will be lifted next Monday, except for Seoul and parts of Gyeonggi province near the southern part of the capital, as “the speculative bubble could resurface at any moment,” according to a senior official with knowledge of Thursday’s meeting. The gathering was attended by top monetary policymakers, financial watchdogs, the Minister of Home Affairs, the Ministry of Home Affairs and officials from the Prime Minister’s Office.

“A housing price correction is inevitable, but a market slowdown due to rapid rate hikes should be carefully considered.” South Korea aggressive rate hike campaign to curb persistent inflation weighing on global economy .

Rising borrowing costs since last August have slowed the property boom in Asia’s fourth-largest economy, forcing policy makers to move up the timeline for deregulation from next year to December. According to the latest data from the city of Seoul, there were 610 apartment transactions in Seoul in September, the lowest monthly level since he began tracking the data in 2006.

“The goal is a soft landing in the real estate market, and the plan is to keep demand strong while helping people who really need their (first) homes,” Loan said.

Meanwhile, government guarantees will be given to businesses, especially construction companies, that need more liquidity for project finance loans, Chu added. If the company seeking help promises to exhaust all resources before seeking intervention.

Funding for the project was hit by a default reported by the state developer in early October. A local developer building a Legoland theme park in Gangwon Province missed bond payments, freezing bond and money markets and prompting the government to inject liquidity. acknowledges that they could have done better to avoid undermining investor confidence in the government.

Siyoung Choi (siyoungchoi@heraldcorp.com)

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