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Gov't announces stricter lending policies to clamp down on property speculation Updated: 2017-06-19 12:05:10 KST

The Korean government is attempting to crack down on real estate speculation, which many experts say is out of control in some parts of the country.
Finance ministry officials announced a new set of measures on Monday, which aim to stabilize the market by clamping down on speculation and regional polarization.

"In the second half of the year, we believe a possible interest rate hike, an increased supply of homes and other factors will aggravate the current polarization in the market. Excessive speculation for profits lowers the ability of actual homebuyers to purchase properties."
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In a bid to prevent a housing bubble, the new policies will target hotspots throughout the country-- adding three additional regions to the originally designated 37-- which include districts in Seoul, Gyeonggi-do Province, and the cities of Sejong and Busan.
In those areas, homeowners will be prohibited from reselling their homes for 18 months, while those in four Gangnam-belt districts in southern Seoul will face even tougher rules.
And to crack down on easy mortgage loans, two key policies have been tightened up in designated areas.
The loan-to-value ratio, which allowed up to 70 percent of a property's value to be financed through loans, will be lowered to 60 percent.
As for the debt-to-income ratio, loans won't be able to exceed 50 percent of the applicant's income, also down ten percentage points.
However, the previous rates will be maintained for low-income households and actual homebuyers.
The government has also decided to enforce the debt-to-income ratio on collective mortgages, which were granted without income screening as they're brokered en-masse through construction companies selling new properties.
Redevelopers will also face limits on how many properties they can buy in overpopulated zones.
Furthermore, finance officials have pledged to strengthen their crackdown on illegal trade practices that could affect homebuyers.
They will also ensure that low-income households will be able to benefit from housing support.
Oh Soo-young, Arirang News.
KOGL : Korea Open Government License
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