Seoul, Gyeonggi homeowners to be virtually ineligible for additional mortgage loans

South Korea’s financial authorities are reinforcing regulations to dissuade homeowners in Seoul from taking out loans to purchase additional residences, part of ongoing efforts to bring housing prices under control and subdue household debt.

The Financial Services Commission recently revised its banking oversight regulations, which now restrict anyone who owns a home in the Seoul metropolitan area from taking on additional mortgages, officials said Wednesday.

The new restrictions on lending will not affect homeowners in other metropolitan cities who wish to purchase new homes in provincial areas, or provincial homeowners.

Upon announcing a new set of real estate regulations in September, the government said metropolitan homeowners would be ineligible for additional mortgage loans but that exceptions could be made under certain circumstances.

All areas of Seoul are considered “speculative” housing markets, while 11 of its districts, including three affluent districts in southern Seoul -- Seocho-gu, Gangnam-gu and Songpa-gu -- have been designated as “overheated speculative” areas. These areas are subject to heavier taxes, tougher loan-to-value ratios and tougher debt-to-income ratios when maximum mortgage loans are calculated.

By Son Ji-hyoung 
(consnow@heraldcorp.com)