FSC Considers Support for Balance Payments Only for New Apartment Residents... Excluding Youth and Existing Apartments

The Financial Services Commission (FSC) is considering targeted support for residents of new apartments who are unable to obtain balance payment loans due to aggregate household loan regulations. The agency plans to exclude buyers of existing apartments and measures to ease Loan-to-Value (LTV) ratios for youth and newlywed couples from the support package.

On the 2nd, the financial authorities convened the heads of the nation's five major banks to request cooperation on the execution of balance payment loans for actual occupants of new apartments. A key component of the plan involves expanding the scale of public guarantees for Project Financing (PF), including for non-apartment housing supplies pursued by the Ministry of Land, Infrastructure and Transport, to support fundraising for housing developers. The government intends to focus financial support on suppliers rather than demanders, within a range that does not directly stimulate housing prices.

Despite demands at real estate policy discussions presided over by President Lee Jae-myung to fully apply LTV regulations at the previous 70% level for first-time homebuyers or those without homes, these options were excluded due to concerns over overheating the real estate market.

The authorities have calculated projections for balance payment loan demand and the net increase in aggregate household loans for the second half of the year. Measures related to housing finance were announced in mid-October, following the release of the tax reform bill.