Jeonse Loans Tightened Amid 'Loan Open-Run' Chaos

[Anchor]

Lending policies are also undergoing some changes. With the emergence of "loan open-runs" fueling growing complaints from genuine homebuyers, the annual total loan target has been doubled. However, to curb speculative demand, new restrictions on jeonse (lump-sum housing deposit) loans have been introduced for single-home owners who do not reside in their properties.

Here is more from reporter Park Jae-yeon.

[Reporter]

The government has decided to relax its target for household loans, raising the growth cap from 1.5% to 3% compared to last year.

This will create room for the five major commercial banks to extend about 4 trillion won more in loans, and around 30 trillion won across the entire financial sector.

Mid-term apartment payments and balance loans, which were difficult to process under previous limits, are expected to become more accessible.

This accommodates the demands of homeowners who had already purchased pre-sale properties, anticipating they could secure loans before regulations tightened.

[Lee Eok-won / Chairman of the Financial Services Commission: "Regarding linked loans associated with new housing supply, such as relocation and balance loans, we will rationally adjust the aggregate targets to ensure that the pre-sale and move-in processes proceed smoothly...."]

However, loans flowing into existing apartments are being tightened further.

A representative measure is the decision to block jeonse loans for single-home owners who do not reside in their properties, whom the government has classified as speculative.

This means jeonse loans will be restricted for homeowners who own a house in regulated areas of the Seoul metropolitan region but have never actually lived in it.

The government stated that it does not have an exact count of the number of non-resident single-home owners or the total loan volume that will be subject to these new regulations.

While it explained that banks can independently evaluate and issue loans in unavoidable cases, it remains to be seen how this will actually be applied in the field.

In addition, the guarantee ratio for jeonse loans in the Seoul metropolitan area and regulated zones, currently at 80%, has been reduced to 70%.

A lower guarantee ratio could make jeonse loan screenings relatively stricter or reduce loan limits.

With tax revisions increasing incentives for actual residency, widespread concerns remain that jeonse supplies will shrink. Combined with these jeonse loan regulations, forecasts suggest the jeonse and rental market could face further instability.

(Video by Cho Choon-dong | Video Editing by So Ji-hye | Design by Lee Jun-ho)
※ Please note: This article was translated by AI and may contain errors.