Financial Services Commission forms task force to reassess LTV, reduce limits, pressure sales amid rental concerns
President Lee Jae Myung has directly targeted the issue of extending maturity dates for mortgage loans held by multiple-homeowners. The strategy is interpreted as aiming to raise the threshold for loan extensions to a level comparable to new loans, thereby encouraging these owners to list their properties on the market.
President Lee posted on his social media account early on the 13th, writing, “It is problematic to provide financial benefits to those who acquire multiple homes for investment or speculation rather than for self-occupancy.” He added, “Even after years of opportunities, including reduced transfer taxes, those who still hold multiple homes — should it be fair to grant them additional benefits for loan extensions once their loans mature?” Later that morning, he posted again, stating, “If multiple-homeowners succeed by ignoring the opportunity to reduce transfer taxes, it signifies the failure of this government’s real estate policies.” This signals an intent to pressure those who have not listed their properties despite the impending end of the transfer tax grace period, now employing loan regulations.
Previously, real estate financial regulations focused mainly on new loans. Under the government’s June 27 mortgage regulations announced last year, additional home purchases by multiple-homeowners in the capital region and regulated areas were effectively blocked. However, existing loans were not subject to retroactive regulations, allowing maturity extensions to continue as a customary practice.
Following the president’s message, the Financial Services Commission swiftly aligned its response. On the same day, the commission held an emergency inspection meeting across the financial sector and decided to form a public-private task force (TF) to review loan maturity extensions for multiple-homeowners and develop improvement measures. Market discussions suggest potential measures such as reassessing the Loan-to-Value (LTV) ratio at the time of extension, reducing limits, and strengthening income reviews — effectively applying conditions similar to new loans.
Such measures would reduce loan limits or increase repayment pressure, forcing multiple-homeowners to list their properties. Even rental business owners, who have circumvented household loan regulations by using business loans, are expected to face scrutiny due to shorter maturity periods and tightened limits. While business loans have shorter maturities and higher limits compared to household loans, raising regulatory standards to household loan levels would compel rental business owners to sell their properties.
Experts believe this measure will increase holding costs for multiple-homeowners, driving a short-term surge in listings. Koh Jong-wan, head of the Korea Asset Management Research Institute, stated, “If we ease self-occupancy requirements while tightening loans, listings in areas like Gangnam’s three districts could increase.”
However, concerns about side effects persist. If financial burdens force multiple-homeowners to raise rents, the jeonse (lump-sum deposit) and monthly rental markets could destabilize. Koh added, “Once the intensified transfer tax takes effect in May, listings may again stagnate, and increased financial burdens could be passed to tenants, driving up jeonse and monthly rent prices.”
Criticism also arises over policy consistency and market trust. Song Seung-hyun, head of the Urban and Economy Institute, warned, “Sudden restrictions on existing loan extensions risk cascading shocks to households and the financial sector.” He expressed concern that if real estate policies are perceived as changing frequently based on political logic, market predictability and trust in government policies will decline.
