(1) Reasons for Proposal

The Amendment reflects in the Regulations matters necessary as follow-up measures for “Housing Market Stabilization Measures” (September 13, 2018; jointly proposed by the relevant government departments), and amendments necessary to ensure efficient operation of mortgage regulations.

(2) Major Provisions

A. Amend matters concerning mortgage lonas for housing purchases in restricted areas by home-owning households

Restrict mortgages for any household owning two or more homes which intends to purchase a new home in a restricted area, and allow mortgage loans for any household owning one home which intends to purchase additional housing in a restricted area and for whom an actual intention to occupy has been recognized (no separate mortgage restrictions for additional housing purchased in non-restricted areas)

B. Amend matters concerning mortgage loans for high-priced housing purchases in restricted areas

Restrict, in priciple, mortgage loans for high-priced housing purchases in restricted areas, but prescribe various measures to protect actual occupants, such as by allowing high-priced housing purchases for any non-home-owning household that moves in within 2 years of purchasing the house (no separate mortgage restrictions for high-priced housing purchased in non-restricted areas)

C. Amend matters concerning mortgage loans for livelihood stability funds for households owning one home

Provide maximum protection for the capital requirements of actual occupants by applying the current LTV and DTI ratios to households owning one home and restricting loans to 100 million won per collateral good per year, while allowing loans in excess of 100 million won where approved by the credit assessment committee

D. Amend matters cocerning mortgage loans for livelihood stability funds for households owning two or more homes

Provide maximum protection for the capital requirements of actual occupants by increasing the LTV and DTI ratios by 10%p for households owning two or more homes and restricting loans to 100 million won per year, while allowing exceptions from the relevant provisions where approved by the credit assessment committee

E. Prescribe matters concerning early repayment by borrowers

Prescribe procedures stating that where a borrower intends to repay a loan prior to the maturity of a mortgage, he or she shall check whether the terms and conditions agreed upon with the bank have been fulfilled

F. Prescribe matters concerning report on credit assessment committee approval results

Prescribe procedures stating that the approval results of a bank’s credit assessment committee shall be reported to the Governor of the Financial Supervisory Service on a quarterly basis

G. Amend matters concerning loan-to-value (LTV) ratio for housing rental business loans

Streamline provisions to apply an LTV of 40% to housing rental business loans while restricting the applicable areas to housing speculation zones and overheated speculation zones, and exclude cases where housing is newly built and leased

H. Prescribe matters concerning debt-to-income (DTI) ratios for mortgages

Apply a debt-to-income (DTI) ratio equal to the loan-to-value (LTV) ratio while prescribing various exceptions to protect actual occupants with a low income, such as by excluding from DTI application any small loan of up to 100 million won