The market turmoil is aggravating as the government announces a strong household debt management plan. Jeonse loans were excluded from the total debt-to-income ratio (DSR) regulation, but it is highly likely that they will be included in the total amount regulation from next year. In addition, the group loan for mid-payment for apartments is also excluded from the DSR regulation, and the pre-sale market is expected to heat up even more.
According to the Financial Services Commission and the real estate industry on the 27th, Jeonse loans, which are considered to be representative end-user loans, were excluded from the DSR regulations announced the day before. However, until the end of this year, it will be excluded from the calculation of the limit on the increase in the total amount of loans from banks, but from next year, it will be included in the total limit to manage the increase.
If the increase in household debt does not stop next year, the FSC is also planning to consider starting a ‘Plan B (preliminary plan)’ and including Jeonse loans in the 40% DSR calculation.
In addition, from next year, installment repayment of not only home mortgage loans, but also cheonsei loan and credit loans will be substantially expanded. This means that the burden of borrowing will increase as banks demand that the principal be repaid in installments as soon as they receive a loan.
In fact, tenants who think this year is the last year for a jeonse loan are in a hurry to find a jeonse house. In particular, tenants who have already used the right to renew their contract for two years next year and are pushed back to the jeonse market are more anxious.
A representative of a real estate agency in Gangnam said, “I received more than 10 calls to find a jeonse house in just one day yesterday.”
In addition, the government decided to apply the balance loan regulation based on the ‘notice date of resident recruitment’. Therefore, if the date of announcement of resident recruitment is before the implementation of the second stage of the DSR in January next year, the DSR will not be applied even if the total loan amount exceeds 200 million won when dealing with the remaining loan.
In the end, there is also a forecast that construction companies will pour out the ‘last-minute push’ before the regulation. According to Real Estate R114, 93,41 households (excluding rental sales) are scheduled to be sold in 92 complexes in the metropolitan area in the fourth quarter. This is the second highest volume since the fourth quarter of 2015 (95,686 households), as a record since the number of pre-sale units were counted in 2000.
An industry expert said, “The balance loan may become difficult from next year, so the competition for winning the complexes sold this year will be fierce. there,” he pointed out.