(1) Reasons for Proposal

This Partial Amendment reflects in the Regulations matters necessary as follow-up measures for “Housing Market Stabilization Measures” (December 16, 2019, February 20, 2020, June 17, 2020, and July 10, 2020; jointly proposed by the relevant government departments), and amendments necessary to ensure an efficient operation of mortgage regulations.

(2) Major Provisions

A. Specify mortgages for high-priced housing purchases in speculation areas and high-speculation areas.

For taking out mortgages with high-priced houses in speculation areas and high-speculation areas as collateral, tighten LTV regulations to 20% for houses whose price exceeds 900 million won.

B. Specify mortgages for super-high-priced housing purchases in speculation areas and high-speculation areas.

Ban mortgages with super-high-priced houses as collateral in speculation areas and high-speculation areas, and allow a new annual loan of up to 100 million when taken out for the purposes of returning leasehold deposit.

C. Handle mortgages in areas subject to adjustment.

Apply LTV within 50% for taking out mortgages with houses in areas subject to adjustment as collateral, and tighten LTV to 30% for houses exceeding 900 million won.

D. Strengthen the management of business loans for housing purchases in restricted areas.

Ban business loans for housing purchases in restricted areas for business entities other than those in house renting or sales.

E. Ban mortgages for house renting or sales business entities.

Ban all mortgages for house renting or sales business entities in all areas (applicable to new loan applications after July 1, 2020), and allow mortgages if applicable to exceptions permitted by the Ministry of Land, Infrastructure and Transport (non-profit corporations and public interest corporations).

F. Strengthen the management of the debt service ratio (DSR) in speculation areas and high-speculation areas.

Apply the borrower-based DSR (40% for banks and 60% for non-banks) to household borrowers in speculation areas and high-speculation areas if their loans are taken out after December 23, 2019, and exempt the foregoing for taking out loans inevitably or repaying debt.

G. Tighten actual demand requirements for taking out mortgages in restricted areas.

Strengthen existing house liquidation and move-in obligations for household borrowers who take out mortgages for housing purchases in restricted areas (see more in regulation changes since liquidation and move-in obligations vary depending on the mortgage timing).

H. Alleviate income requirements for working class people and actual occupants.

Decrease married couple-combined annual income requirements for “working class people and actual occupants,” which reduce LTV and DTI (a 10-percentage-point decrease), to 80 million won (90 million for those who buy their first house).

I. Supplement transitional measures for group loans, including balance loans, when designating or changing restricted areas.

Apply loan regulations to the group loans of one-house owners who signed non-homeowner and conditional liquidation agreements before designating or changing restricted areas.