With stricter regulations on mortgage loans, homebuyers are facing challenges in securing financing. Following the government's cap on mortgage loans in the metropolitan area at 600 million won, KB Kookmin Bank has further reduced its home purchase loan limit to 300 million won. This move is expected to directly impact the mid-range housing market, which relies heavily on loans, and could lead to a decrease in demand for switching homes and increased instability in the rental market.
According to industry sources, starting July 10, KB Kookmin Bank will lower the maximum limit for home purchase loans in the metropolitan area and regulated regions from 600 million won to 300 million won. While this change excludes relocation loans, group loans, and policy financial products, it is likely to make financing conditions more difficult for general homebuyers.
Concerns have been raised that if banks begin to implement stricter self-regulation on loans, the financing environment for genuine buyers could deteriorate more rapidly than expected.
The group most likely to be affected is those looking to sell their current homes and move to new ones. Since the structure involves combining the sale proceeds of the existing home with a mortgage to cover the balance of the new home, a reduction in the loan limit means buyers will need to find additional cash. Buyers who have already signed contracts or are nearing the final payment may also need to revise their financial plans if their expected loan amounts decrease.
Particularly, demand for switching homes is closely tied to the timing of selling existing homes and purchasing new ones, which could lead to a chain reaction of transaction delays. If a buyer intending to purchase an existing home delays their contract due to insufficient loans, it could impact higher-tier transactions, slowing down the overall transaction speed.
The mid-range market, which is heavily reliant on loans, is also expected to be directly affected. With government regulations already significantly reducing loan capacity for high-priced homes, this latest measure is likely to further increase the financial burden on the market for genuine buyers looking for homes priced below 1.5 billion won.
A real estate agent in Mia-dong, Gangbuk District, stated, "The Gangbuk area has a high proportion of genuine buyers, so it is likely to be directly impacted by the loan regulations. Most customers looking at apartments priced between 500 million and 700 million won plan their finances based on mortgage loans. If the limit is reduced to 300 million won, they will need to secure more of their own funds. Instead of immediately canceling contracts, we expect to see an increase in inquiries from those saying, 'I will wait a little longer.'"
There are also discussions in the market about the potential for a so-called 'balloon effect,' where genuine buyers with reduced loan capacity may shift to relatively lower-priced areas. Demand that was previously considering the outskirts of Seoul or southern Gyeonggi Province may move to areas with lower entry barriers.
However, genuine buyers who find it difficult to secure funds are likely to postpone purchases and remain in the rental market. With a recent decrease in rental listings and an increase in lease renewals in Seoul and the surrounding metropolitan area, concerns are growing that if waiting buyers enter the rental market, it could further increase pressure on rental prices.
Kim In-man, head of the Kim In-man Real Estate Economic Research Institute, noted, "Demand that cannot purchase homes due to insufficient loans will inevitably turn to the rental or monthly rental market. The demand displaced from Seoul may create a balloon effect, moving to relatively lower-priced areas such as Bucheon, Siheung, Ansan, Incheon, Osan, and Yangju. Ultimately, the regulations in the sales market are likely to exacerbate market instability, affecting both the outskirts of the metropolitan area and the rental market."
Nam Hyuk-woo, a researcher at Woori Bank's Real Estate Research Institute, stated, "Given the management of total bank loans, the trend of reducing mortgage loan limits is expected to continue. While some transactions may slow down in mid-tier areas of Seoul and most regions of the metropolitan area, the abundant liquidity in the asset market and the shortage of rental listings may lead to some tenants transitioning to buyers, so we need to monitor for significant downturns."
* This article has been translated by AI.
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