“The house price is much higher than the Jeonse price, but is it common sense for a mortgage loan to come out less than a Jeonse loan?”
As the government imposed multiple regulations on mortgage lending in an attempt to control the increase in household debt, the phenomenon of per capita jeonse loans is occurring more than per capita mortgage lending. It is evaluated that housing mortgage loans are stable for financial companies because they have collateral, and it is irrational for the amount of jeonse loans to be higher even though it is natural for the loan amount to increase with the rise in housing prices.
According to the results of Maeil Economic Daily reprocessing data received from the Financial Supervisory Service by Bae Jin-kyo, the Justice Party lawmaker’s office on the 18th, 4 of the 7 commercial banks (KB Kookmin, Shinhan, Hana, Woori, SC Cheil, Citi, and Enterprise) (KB Kookmin) In Shinhan, Hana, and SC Cheil), there was a phenomenon in which per capita jeonse loans were larger than per capita mortgage loans.
The bank with the largest difference between the amount of jeonse loans and mortgage loans per capita was SC First Bank. The bank’s per capita jeonse loan amounted to 237 million won, while its mortgage loan amount was 158 million won, widening the gap to about 80 million won. Hana (23 million won), KB Kookmin (12 million won), and Shinhan (6.4 million won) also showed that per capita jeonse loans were larger than mortgage loans. According to the Korea Real Estate Agency, the national average house price in September was 419.9 million won, and the national average jeonse price was 251.8 million won. Even though there is a difference of 160 million won between the average house price and the jeonse price, the per capita jeonse loan amount is larger than the per capita mortgage loan amount.
It is analyzed that the primary cause is the government’s layered regulations that are strongly applied to mortgage loans. Currently, when purchasing a house with a market price of less than 900 million won in a speculative zone or overheated speculation district, the mortgage loan ratio (LTV) is applied at 40%, so you can get a mortgage loan. For houses with a market value of more than 900 million won, 20% LTV is applied to the excess. Homes with more than 1.5 billion won are not eligible for mortgage loans. The total debt-to-income ratio (DSR) regulation, which provides loans based on income, also applies. DSR is the ratio of all household loan principal and interest repayments divided by annual income. Currently, the DSR cannot exceed 40% when receiving a mortgage when purchasing a house with a market value of more than 600 million won. On the other hand, jeonse loans are excluded from LTV and DSR regulations. You can borrow up to 80% of the rental deposit under the lease agreement. You can get a loan of up to 500 million won within the limit guaranteed by SGI Seoul Guarantee.
One of the reasons is that house prices have risen so high that only people with enough cash are unable to buy a house. An official from a commercial bank said, “Housing prices have risen so much that it seems that the general public cannot afford to buy a house even if they make ‘investment by collecting loans to the soul’. There is a phenomenon of ‘polarization’ in which Jeonse is shifted through loans,” he said.
The financial authorities are excluding Jeonse loans from the total household debt management by the end of the year, and are willing to tolerate the increase in Jeonse loans. This is because there is a concern that if the Jeonse loan regulation is applied to the common people who have been pushed to the jeonse because they cannot buy a house, they will suffer damage. However, instead of releasing the jeonse loans, commercial banks are tightening loans related to home purchases and credit loans to manage debt.
From the 20th, Hana Bank decided to temporarily suspend credit loans and loans for real estate purchases such as housing, shopping malls, officetels, and land. Woori Bank also reduced the preferential interest rates for some credit loan products to help control the growth of loans. As soon as this news spread, the loan windows of commercial banks flooded with phone calls related to loans. An official from a commercial bank said, “The government has announced that it will make sure that Jeonse loans will not be interrupted by the end of the year, but more inquiries about loans are coming from customers with an anxious mind than usual.”
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