FSC to ease lending rules for first-time homebuyers

Oct 28, 2022, 08:18 am

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Financial Services Commission (FSC) Chairman Kim Joo-hyun said Thursday the government will ease the loan-to-value (LTV) ratio for first-time homebuyers and single-home owners to 50 percent, and allow mortgage loan for homes worth over 1.5 billion won./Source: Yonhap

AsiaToday reporter Choi Jung-ah

Financial Services Commission (FSC) Chairman Kim Joo-hyun said Thursday the government plans to ease the loan-to-value (LTV) ration for first-time homebuyers and single-home owners to 50 percent, and allow mortgage loan for homes worth over 1.5 billion won.

In an emergency economic meeting presided over by President Yoon Suk-yeol, Kim said, “Related regulations have been tightened, but as interest rates have recently risen and policy conditions have changed, we have decided to take a bold financial step.”

So far, the government has been completely banning mortgage loans for homes valued at more than 1.5 trillion won in speculative areas. It has controlled the LTV limit at 20-50 percent. Those who purchase a house worth below 900 million won can take mortgage loans of up to 40 percent of the home price, and up to 50 percent for a house worth over 900 million won and below 1.5 billion won. Secondary financial institutions lend up to 50 percent. However, regulation for multiple homeowners is maintained.

“There is a growing concern about a possible failure of the property market’s soft landing,” Kim said. “As it is important to stabilize the financial market, we are also discussing it with the Ministry of Land, Infrastructure and Transport.”

The deregulation measures will be implemented early next year. The FSC plans to prepare detailed plans in consultation with related agencies and revise the banking supervision regulations. “We will ease regulations depending on the situation, and work for a soft landing in consultation with the Ministry of Land, Infrastructure and Transport for additional support.”

In addition, financial support for small and medium-sized venture companies will be promoted. The government plans to provide a total of 50 trillion won in financial support packages to alleviate the burden of interest rate hikes and provide sufficient funds for future growth.

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