SEOUL, Jan. 7 (Korea Bizwire) — South Korea said Tuesday that foreigners are also subject to tightened mortgage rules in a move to plug any possible loopholes in its efforts to stabilize home prices.
The Financial Supervisory Service (FSS) said the tightened mortgage rules are being applied to both South Koreans and foreigners.
Under last year’s measures, mortgage loans will be banned when buying a house worth over 1.5 billion won (US$1.3 million) in “speculative and overheated speculative” areas, and the loan-to-value ratio for the purchase of a home valued from 900 million won to 1.5 billion won will be cut to 20 percent from 40 percent.
It means that those who purchase a house worth below 900 million won can take mortgage loans of up to 40 percent of the home price.
Those who buy a house worth 1 billion won can get mortgages of 360 million won for the first 900 million won plus 20 million won for the other 100 million won.
The FSS also said financial companies can withdraw business loans extended to companies if the companies are found to have used the loans in buying homes.
Housing prices have been on the rise in recent years, spurring policymakers to roll out a series of measures, including tightened home-backed loan regulations and hefty taxation, to cool down home prices.
But a supply shortage in Seoul and adjacent areas and low borrowing costs have continued to drive up demand for new apartments, while prodding builders to scramble to demolish aged apartments on hopes for hefty gains after rebuilding.