Loan thresholds at banks are rising again. Several banks are reducing mortgage loan limits and blocking loan applications. After competing for loans in the first half of the year, banks are suddenly closing their doors in the second half as they reach their annual targets. This has disrupted the financial plans of actual buyers who have already signed purchase contracts and set payment schedules.
The loan regulations themselves are not inherently wrong. With household debt increasing and mortgage loans supporting rising housing prices, financial authorities cannot remain passive. Allowing borrowers to take out as much money as they want is also not a responsible policy. The issue is not whether to tighten loans, but rather who’s loans are restricted, when, and how.
The main criticism of the current overall management is its unpredictability. Banks lower interest rates and increase loans in the first half of the year, but as they approach their annual growth targets, they suddenly reduce limits and close application windows. When one bank imposes restrictions, demand shifts to another bank, which then follows suit in tightening its criteria.
Sudden regulations for those who have already signed contracts are not merely changes in financial conditions. If the expected loan does not materialize, buyers risk losing their deposits or scrambling for high-interest funds. Even if overall targets are important, the public needs a level of predictability to plan their finances.
Another problem is the inability to distinguish between genuine demand and speculative demand. Those with substantial cash can still purchase homes even if loan limits are reduced, but for those without assets, the moment loans are blocked, home purchases become difficult. The harsher the loan regulations, the more cash-rich individuals survive, while the middle class and younger generations are pushed out.
Of course, it is not feasible to lend as much as desired solely because someone is a first-time homebuyer. Debt exceeding repayment capacity poses risks to borrowers, and indiscriminately increasing loans during a period of rising home prices can further fuel price increases.
A more fundamental reason for the loss of support for loan regulations is the perception that the government is blocking loan applications while failing to control housing prices. If expectations for rising home prices persist, demand will not easily dissipate even if limits are reduced. When bank loans are restricted, funds shift to secondary financial institutions or family resources. Ultimately, only official loans decrease, widening the gap based on cash mobilization ability.
Loans are just one of many tools to stabilize housing prices. Supply takes time, and tax reforms carry significant political burdens, so financial regulations should not be the only repeated measure. If housing prices continue to rise despite loan restrictions, public distrust in the policy will only grow.
Ultimately, tax and financial regulations must be intricately designed together. First-time homebuyers and additional purchases by multiple homeowners should not be treated with the same criteria. Greater burdens should be placed on high-value homes and multiple property owners, while reasonable financial access opportunities must be guaranteed for long-term residents and first-time buyers.
Excessively high transaction taxes can lock up housing inventory. The more real estate one owns, especially at high values, the more corresponding costs should be imposed through property taxes.
Overall loan management should also move away from simply setting annual targets and abruptly applying brakes in the second half. Monthly and quarterly supply plans should be established, and transitional measures should be in place for borrowers who have already signed contracts. Genuine first-time homebuyers can be managed separately, while additional loans for high-value homes and multiple property owners can be more strictly limited.
The public's backlash against loan regulations is not a demand for unlimited borrowing. It stems from a growing distrust that the government has failed to stabilize housing prices while banks, after encouraging loans in the first half, suddenly close their doors in the second half.
For loan regulations to gain support, they must be fair and predictable. Above all, efforts to stabilize housing prices through supply and tax policies must accompany them. Proposals to increase money supply while ignoring household debt are irresponsible, but policies that only restrict loans while leaving housing prices unchecked cannot endure.
* This article has been translated by AI.
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