KB Kookmin Bank has lowered the ceiling on mortgages for home purchases to a maximum of 300 million won, disrupting the funding plans of end-users approaching their final payments. Buyers who have already paid down payments or contract deposits are voicing confusion over how to raise the shortfall in loan funds. In particular, in regulated zones in Seoul and the surrounding metropolitan area, anxiety is growing over whether contract deposits handed over to complete land transaction permit procedures can be refunded.
KB Kookmin Bank capped mortgages for home purchases nationwide at a maximum of 300 million won starting on the 10th. Dual-income, high-earning couples in their 30s and newlyweds, who had recently been active in buying homes using loans, are expected to be directly affected. At transaction sites, there are also concerns that the measure could prolong the slump in the low- and mid-priced housing markets in Seoul and the metropolitan area.
At brokerages around Seongbuk-gu and Gangbuk-gu in Seoul, inquiries from buyers in the middle of closing deals continued from the 8th, when news of KB Kookmin Bank's loan ceiling cut was suddenly delivered, through the day of reporting. These areas have many low- and mid-priced apartments priced at 1.5 billion won or less, which were relatively less affected by the government's total loan volume regulation and eligible for loans of up to 600 million won. Recently, end-user buyers who are office workers in their 30s have also been active.
At the sites, there were many cases of buyers asking how to handle contracts if they cannot cover the final payments due to the reduced loan ceiling. The head of Brokerage A in Gireum-dong said, "A buyer who agreed to purchase a small 59-square-meter apartment for 1.1 billion won paid a 50 million won contract deposit to the homeowner and is waiting for a land transaction permit, but asked for a solution, saying that even if the permit comes through, the final payment will fall short if the loan is reduced." He added, "For now, we are looking into other loans as much as possible, but from the buyer's perspective, they are anxious that they might lose even the contract deposit as things stand."
The head of nearby Brokerage B also said, "A land transaction permit came through and the main contract was imminent, but the buyer complained about loan uncertainty, so we decided to postpone the contract for a few days." He added, "Since mortgages are usually taken out one to two months before the final payment loan, quite a few people signed contracts but pushed their final payment schedules back by several months."
Complaints are also erupting that there was not enough advance notice. The head of Brokerage C in Mia-dong noted, "Newlyweds in their 30s usually have only enough money for a jeonse lease, but there are no jeonse listings and monthly rents are rising, so many decided they would rather buy a home and shoulder the loan interest." He pointed out, "Jeonse listings have shrunk, and now loans are being tightened too, so complaints of 'this is too much' are inevitable."
The financial sector's loan reduction is analyzed to be a particularly large burden for office workers and newlyweds in their 30s living in Seoul. With the average price of a Seoul apartment exceeding 1 billion won even in the Gangbuk area, those in their 30s, who have relatively little accumulated wealth, have limited means of raising home purchase funds other than loans from financial institutions.
With gap investment—buying homes while assuming an existing jeonse tenant—also blocked, loans account for 40% of the funds those in their 30s raise when buying a home. In areas such as Nowon-gu and Jungnang-gu, this proportion reaches 60%.
Experts believe the shock could be greater in the low- and mid-priced areas of Seoul and the metropolitan area, where transaction volume has recently increased, than in areas concentrated with high-priced homes such as the three Gangnam districts, which had already been affected by the total loan cap. This is because the latest ceiling limit also includes first-time homebuyers, and demand from those switching homes—buying a new house after disposing of an existing one—may also face difficulties in raising funds.
At transaction sites, moves to abandon preliminary contracts are also emerging amid concerns that the market will contract going forward. Even for those maintaining contracts, cases of delaying the final payment date or looking into loan products from other financial companies are expected to increase.
On the other hand, group loans for interim payments, relocation costs, and final payments, as well as fund loans such as the Didimdol loan subject to income requirements, and auction final payment loans, were excluded from this restriction. Accordingly, observations have been raised that a balloon effect could emerge, with housing demand shifting to the subscription market or the real estate auction market, which are relatively less affected by loan regulations.
With about 19,000 new apartments set to be offered in Gyeonggi Province alone this summer, there is a possibility that end-users in their 30s with high loan dependency will turn their attention to the subscription market rather than existing home sales.
Forecasts are divided over how much the mortgage ceiling cut will calm housing transactions and price increases. While a decline in transaction volume is inevitable, centered on areas with high loan proportions, some analyses suggest that the liquidity remaining in the market and the shortage of jeonse and monthly rent listings could continue to stimulate purchase demand.
Nam Hyeok-woo, a real estate researcher at Woori Bank, said, "We will likely see transactions slow in the lower-tier areas of Seoul with high loan dependency and in most areas of the metropolitan area." He added, "But with abundant liquidity from factors such as the stock market boom and moves to switch to purchasing due to the shortage of jeonse and monthly rent listings, it is uncertain whether the transaction reduction will lead to a sharp drop in transactions."
