The government is implementing targeted support measures for young adults and newlyweds while restricting speculative jeonse (lump-sum housing deposit) loans.
The government is launching the "Youth Future Bogeumjari Loan" to enable young adults to purchase non-apartments valued at 400 million won or less (approx. $290,000) as homeowners, while paying principal and interest comparable to current monthly rent levels.
The initiative is designed to serve as a "stepping stone," allowing them to eventually move into apartments or other housing in the future.
To resolve the "marriage penalty," where couples face disadvantages in policy loans upon registering their marriage, the income requirements for newlyweds applying for loans such as the Bogeumjari Loan will also be revised.
At the same time, new jeonse loans and maturity extensions will be blocked for speculative single-homeowners who do not reside in their properties.
Flexibility has also been secured by granting banks the authority to assess unavoidable non-residence reasons and recognize exceptions.
During the "Comprehensive Financial Measures for Real Estate Market Stabilization" announced today (August 13), the Financial Services Commission (FSC) stated that the "Youth Future Bogeumjari Loan," which supports young people purchasing non-apartments such as officetels and villas valued at 400 million won or less, will be introduced as a Korea Housing Finance Corporation product.
The eligible recipients are first-time homebuyers aged 39 or younger with an annual income of 70 million won or less.
For newlyweds, it is sufficient if only one spouse meets the criteria.
The housing size must be 85 square meters or smaller, and the Loan-to-Value (LTV) ratio will be recognized up to 80 percent.
Considering that the current average monthly rent for non-apartments is about 800,000 won, the monthly principal and interest repayment amount was calculated to be around 855,000 won.
This amount is calculated based on the assumption of a 200 million won loan with a 30-year maturity and an annual interest rate of 3.0 percent.
Even when using the Youth Future Bogeumjari Loan, the existing first-time homebuyer LTV preferential benefits will be maintained without being eliminated.
Shin Jin-chang, Secretary General of the FSC, explained in a pre-briefing yesterday (August 12), "Generally, it is difficult for young people to buy an apartment priced over 1.5 billion won at once with their own income," adding, "The goal is to support them in buying homes with a burden comparable to monthly rent, helping them use this as a stepping stone to move into larger homes or apartments."
The Youth Future Bogeumjari Loan is planned to be supplied temporarily at 3 trillion won annually for two years.
Secretary General Shin stated, "We will operate it for about two years first, and if there is a positive response, we will consult with fiscal authorities to potentially include apartments in the eligible support targets as early as next year."
Support measures related to semi-jeonse, monthly rent, and jeonse for young adults have also been prepared.
A new "Jeonse-Monthly Rent Loan Combined Guarantee" product will be launched to guarantee both jeonse and monthly rent loans, raising the guarantee ratio from the existing 90 percent to 100 percent.
Previously, applicants had to choose between a jeonse guarantee and a monthly rent guarantee.
The eligible targets are homeless young adults aged 39 or younger with an annual income of 70 million won or less.
For newlyweds, the criteria are applied based on one spouse.
Jeonse support will also expand the eligible targets and loan limits of the current "Youth Special Jeonse Loan Guarantee."
The eligible age limit will be expanded from those aged 34 or younger to homeless young adults aged 39 or younger.
The loan limit for newlyweds and households with children will increase from the previous 200 million won to 300 million won.
Currently, the Korea Housing Finance Corporation's special jeonse guarantee for homeless young adults targets those aged 34 or younger with a maximum limit of 200 million won.
These three sets of youth housing support—covering purchase, semi-jeonse, and jeonse—are provisionally scheduled for release in January next year.
The FSC also introduced measures to resolve the "marriage penalty," where individuals met policy loan income criteria before marriage but were excluded after marriage due to the combination of spousal incomes.
The income requirement for newlyweds applying for the Bogeumjari Loan will add a condition stating that "the annual income of one of the spouses is 70 million won or less" to the existing requirement of "combined spouse income of 85 million won or less."
Applicants will be able to receive loans if they meet either of the two conditions, taking effect starting October.
The Didimdol and Beuttimok loans will also permit loans if at least one spouse satisfies individual income criteria of 60 million won or less and 50 million won or less, respectively.
To support actual residents with genuine housing demand, mortgage loans related to housing supply, such as relocation, intermediate payment, and final balance loans, will be managed separately from financial companies' total volume management targets.
Currently, these loans are included in the total volume management performance of financial companies, causing the banking sector to independently reduce loan limits to achieve its targets.
This has led to difficulties with group loans for newly built apartment complexes nearing occupancy.
Accordingly, relocation loans for reconstruction and redevelopment projects, as well as intermediate and final balance loans for new occupancy complexes, will be excluded from the financial companies' total volume management targets to ensure smooth capital supply.
The application of the "Debt-Service-Ratio (DSR) Future Income Recognition Standard," which reflects the potential future income growth of young generations when financial companies calculate a borrower's income, will also be expanded.
Exceptions will be recognized to allow first-time homebuyer LTV benefits—through screening by a financial company's credit review committee—if there are unavoidable reasons, such as inheriting housing shares as a minor.
Jeonse loan guarantees will be restricted for speculative single-homeowners.
Currently, multi-homeowners and individuals who acquired apartments exceeding 300 million won in speculative zones or overheated speculation zones are restricted from guarantee institutions' jeonse loan guarantees, preventing them from receiving new jeonse loans or extending maturities.
The government is adding speculative single-homeowners who do not reside in their properties to this regulatory target.
An individual will be judged as speculative if they meet all three conditions: owning a single home in the Seoul metropolitan area or regulated areas, leasing out that home, and neither the borrower nor their spouse has ever actually resided in that home.
However, cases where the property is leased to the linear ascendants or descendants of the borrower or spouse are excluded.
Actual residency is judged based on whether addresses have ever been transferred on resident registration.
Reasons recognized as exceptions have been set relatively broadly.
Cases such as purchasing a home with a tenant within a land transaction permission zone fall under exceptional reasons.
In particular, if a financial company's credit review committee recognizes that the non-residence reason is unavoidable, new jeonse loans and maturity extensions will be permitted.
Secretary General Shin stated, "There may be situations the government cannot predict," adding, "In cases recognized by the credit review committee, we will ensure rational and flexible responses."
Jeonse loan guarantee ratios will also be reduced.
The guarantee ratio, currently 80 percent for the Seoul metropolitan and regulated areas and 90 percent for other regions, will be lowered for single-homeowners to 70 percent in the Seoul metropolitan and regulated areas and 80 percent in other regions.
However, the current guarantee ratios for homeless individuals will be maintained.
The government plans to strengthen capital regulations on mortgages with the goal of implementation in January next year.
High-amount and high-DSR mortgages, as well as high-priced and high-LTV mortgages, will be added to the current types of high-risk mortgages.
Risk weights (RW) will be increased to two to four times the current level, and a Sectoral Systemic Risk Buffer (SSyRB) for the household sector will also be introduced.
Specific imposition criteria will be finalized later in consultation with the banking sector.
(Photo: Yonhap News)
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