Mortgage rules loosen as market slowdown weighs on economy

South Korea to ease lending rules for first and second home buyers in Seoul and metropolitan areas from Dec. 1, slowing real estate market due to rising interest rates hurting economic growth to prevent

Home buyers will be able to borrow as little as 20% and as much as 50% of their current property value, allowing them to take out mortgages on properties worth more than 1.5 billion won ($1.09 million), according to an interagency meeting on Thursday. I can. ) is seen by many as a push for deregulation to revive demand and support the larger economy.

“A housing price correction is inevitable, but a widespread market slowdown due to rapid interest rate hikes is something we should be looking at.” Bank of Korea aggressiveness to curb persistent inflation He mentioned the interest rate hike campaign.

Rising borrowing costs since last August have dampened a property boom in Asia’s fourth-largest economy, prompting policymakers to push forward the timeline for deregulation to December and worry about rising household debt. Instead, we were forced to focus on expanding our overall growth.

The latest government data showed 615 apartment deals in Seoul in September, the lowest number since the 2006 tally.

“We have a soft landing in mind and we plan to help those who are having trouble securing their first home,” Choo said.

However, the latest deregulatory measures did not include any sweeping changes to debt service burdens. This is a metric that measures a borrower’s income relative to their mortgage or non-mortgage debt. This metric is used as the strongest restraint on home purchases.

Kim Ju-hyun, chairman of the Financial Services Commission, the top regulator overseeing such changes, reiterated that he still has trepidation about the changes. said it was.

Thursday’s meeting, meanwhile, included an injection of government support for companies taking out project finance loans. The government guarantee applies to these companies, Chu said, adding that state-run Korea Housing and Urban Guarantee will join to ease the liquidity stress facing these companies.

Bond and money markets were rocked in early October when a local state-backed developer defaulted on bond payments. Added to the fuel was the decision of a local insurer to cancel the postponement of the redemption of $500 billion worth of dollar bonds three days ago after he was pressured to meet the original deadline.

Authorities have decided to reactivate government-led funds to stabilize the local bond and stock markets, and asked local financial institutions for donations, a move many see as a belated response.

Siyoung Choi (

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