Layer Upon Layer of Loan Regulations: How Far Will Access to Finance for Ordinary Citizens Be Blocked?
Layer Upon Layer of Loan Regulations: How Far Will Access to Finance for Ordinary Citizens Be Blocked?
As part of the September 7 Housing Supply and Finance Measures, the Financial Services Commission has tightened housing loan and lease loan regulations. In regulated areas, the loan-to-value (LTV) ratio for mortgages is lowered to 40%. Housing sales and rental business loans are completely banned, while the jeonse loan limit for single-home owners is unified at 200 million won. Experts warn that although the measures may curb speculative demand, they also further restrict financial access for ordinary citizens seeking housing stability.
Key Points of the 9.7 Housing Supply and Finance Measures
- LTV cut: In regulated areas such as Gangnam’s three districts and Yongsan, the LTV cap falls from 50% → 40%.
- Ban on business loans: In the Seoul metropolitan area and regulated zones, both new and existing housing sales/rental businesses are banned from obtaining mortgages.
- Jeonse loan limit: For single-home owners, the limit is unified at 200 million won across different guarantee institutions.
- Contribution rate reform: Korea Housing Finance Credit Guarantee Fund contribution fees are tiered by loan size to guide banks’ lending incentives.
Exceptions apply for new housing construction, public-interest transactions, and deposits for tenant refunds.
Impact on Ordinary Citizens
While the measures aim to suppress household debt growth and stabilize housing prices, they also reduce financial accessibility for real buyers. With the June 27 policy and borrower-level DSR rules already in effect, effective LTVs have been felt at only 20–40%. Now, with jeonse loan limits cut, minimum financial support for stable rentals is shrinking.
Without parallel housing supply expansion, the measures risk accelerating the conversion from jeonse to monthly rent, raising the burden on lower-income households.
Expert Opinions
Industry analysts argue the policy focuses on blocking speculative lending through business registrations but ends up narrowing options for ordinary families.
NH Nonghyup Bank’s senior real estate strategist Kim Hyo-sun noted that the practical impact may not be dramatic under current DSR rules but warned that jeonse loan reductions could push more households into costly monthly rentals, requiring delicate complementary policies.
🔎 Key Summary
- Regulated area LTV lowered to 40%
- Housing sales/rental business loans banned
- Jeonse loan limit unified at 200 million won for single-home owners
- Critics warn that tighter rules shrink ordinary citizens’ access to finance
FAQ: 9.7 Housing Finance Regulations
1. When do the measures take effect?
They take effect immediately from September 8, 2025. Applications submitted before then follow previous rules.
2. What does the LTV cut mean?
It reduces the maximum loan amount available in regulated areas, making home purchases more difficult for buyers needing mortgages.
3. Are all rental business loans banned?
Yes, both new and existing registered operators are restricted, except in cases such as new construction or tenant deposit returns.
4. Why is the jeonse loan limit important?
By capping loans at 200 million won, it limits high-value rental financing, making it harder for middle-class families to secure larger jeonse contracts.
5. Could more regulations come?
Yes, the FSC has indicated readiness to expand DSR rules and other macroprudential measures if needed.
Conclusion: Regulation Alone Won’t Secure Housing Stability
The layered loan regulations may help limit speculative investment and stabilize markets in the short term, but without complementary measures like expanded supply and safety nets for tenants, they risk leaving ordinary households with fewer financial options. For policy to succeed, balanced approaches that ensure both market stability and housing security are essential.
