The Financial Services Commission (FSC) is grappling with the challenge of redirecting funds from real estate to the stock market and advanced industries. The agency aims to facilitate productive capital movement while managing stock market volatility and the concentration of high-risk products. Additionally, it seeks to stabilize housing prices without restricting loans for genuine homebuyers.
During a report to the National Assembly's Political Affairs Committee on July 29, FSC Chairman Lee Ok-yeon stated, "If financial resources excessively flow into real estate, it can stimulate housing prices and create adverse effects that distance people from homeownership. Financial resources should flow into productive sectors that lead to corporate growth, job creation, and income generation."
The FSC plans to supply 40 trillion won annually to advanced strategic industries through the National Growth Fund and policy finance. This initiative aims to redirect the flow of funds, which has been heavily concentrated in real estate, towards businesses and industries by activating capital markets and expanding long-term investment.
However, the process of attracting funds to the stock market must also involve managing investment risks. Recently, the stock market has experienced significant corrections, leading to increased volatility, with investments pouring into single-stock leveraged exchange-traded funds (ETFs).
The market capitalization of single-stock leveraged ETFs has surged from 4.4 trillion won to 11.9 trillion won within about two months of their launch. Starting July 31, the FSC will raise the basic deposit requirement to 30 million won and increase the trading unit from one to twenty shares. The agency also plans to strengthen the responsibility of securities firms and asset managers in managing discrepancies and guiding investors on risks.
Despite these measures, market volatility has persisted, prompting calls for a halt or abolition of single-stock leveraged products. The goal is to promote the movement of funds into capital markets while preventing concentration in high-risk products.
In terms of real estate financial policy, defining the scope of regulations and exceptions is crucial. The financial authorities are expected to announce housing finance measures by early next week, based on feedback gathered during a national discussion on real estate policy.
Chairman Lee reaffirmed the principle of managing household debt by severing the link between finance and housing prices. While this indicates a desire to break the structure that supports housing prices through finance, uniformly tightening loan regulations could adversely affect prospective homeowners, young couples, and other genuine buyers.
Consequently, the FSC is considering measures that would tighten loans likely to stimulate housing price increases while easing restrictions on loans for genuine buyers, such as down payment loans. Following concerns that total volume management could block down payment loans, the FSC convened a meeting with deputy heads of lending at the five major banks on July 28 to discuss solutions.
Proposals include excluding down payment loans from total household loan management or raising the housing price limit for the mortgage program from the current 600 million won to 900 million won. Conversely, for jeonse loans, which have been identified as factors contributing to rising housing prices, the FSC is considering lowering the guarantee ratio or reducing the loan limits for single-homeowners.
Ultimately, the key issue is determining the extent of the definition of genuine buyers. Even non-resident single-homeowners may have unavoidable reasons such as supporting elderly parents, educating children, or job relocations, so a blanket regulation could lead to further harm. An FSC official stated, "We must control housing prices, but we cannot allow loans for genuine buyers to be blocked. The biggest concern is defining the scope of genuine buyers."
* This article has been translated by AI.
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