Only the Wealthy Can Buy Homes? 300 Million Won Mortgage Cap Pushes 30s-40s First-Time Buyers to the Brink [Real Estate A to Z]

KB Kookmin Bank Halves Mortgage Loan Limits
Market Impact Spreads After the Weekend
Other Banks Likely to Follow With Sequential Reductions
Buyers Facing Final Payments
Fear of Losing Deposits Grows

Jang Mo (38), an office worker in her second year of marriage, has found herself in a financial emergency as she prepares to pay the final balance for an apartment in Dobong-gu, Seoul, this November. She originally planned to purchase her own home by adding a 500 million won mortgage to her existing jeonse deposit, but this plan was derailed by the bank’s sudden reduction of the loan limit. Jang said, “It’s excruciating to have the limit suddenly cut in half,” adding, “I’ve reached out to multiple loan brokers, but I’ve been told that even alternative channels through other banks are now being blocked one after another.”

Buyers facing imminent settlement dates have been forced to go from bank to bank. Lee Mo (36), who must pay the balance on her apartment in September, said, “I’m terrified that I’ll lose my deposit for nothing,” and added, “I may have to take leave from work and visit banks before other lenders follow suit and cut their limits.” She continued, “I’ve finally managed to get on the property ladder, and now it feels like it’s been pulled out from under me.”

KB Kookmin Bank’s Mortgage Limit Slashed to 300 Million Won... Signs of Spreading to Other Banks

KB Kookmin Bank has reduced the maximum loan limit for housing purchase funds in the metropolitan area and regulated areas from 600 million KRW to 300 million KRW starting from the 10th until further notice. A maximum limit of 300 million KRW also applies to housing purchase fund loans outside regulated areas. The photo shows a loan-related notice inside a KB Kookmin Bank branch in Yeouido, Seoul, on the 9th. Photo by Yonhap News

According to the real estate industry on July 13, after the past weekend, the impact of reduced mortgage limits at commercial banks is rippling across the entire apartment sales market. As loan channels narrow, the barriers to entry for real demand buyers—such as Millennials & Gen Z without homes and newlyweds with limited capital—have risen sharply.

Previously, starting from July 10, KB Kookmin Bank lowered the maximum nationwide mortgage limit for home purchase loans to 300 million won. For apartments worth up to 1.5 billion won in the Seoul metropolitan area and regulated zones, the limit was halved from 600 million won. In non-metropolitan and non-regulated areas, a new 300 million won cap was established. This is the first time since the government restricted the mortgage limit for these areas to 600 million won under the June 27 policy last year that a bank has independently cut its cap in half. This move is aimed at meeting annual household loan management targets.

Other major commercial banks have little room left in their total lending quotas. The five largest banks (KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup) have already used up about 80% of their annual household loan growth targets submitted to financial authorities this year. To prevent a displacement effect where loan demand floods to specific banks, it is highly likely that other lenders will also raise their loan thresholds in succession.

Boroughs Highly Dependent on Loans Hit Hardest

The sharp reduction in loan limits has dealt a direct blow to outer Seoul areas densely populated with apartments valued at 1.5 billion won or less—regions outside Gangnam with relatively less capital. A real estate agent in Dobong-gu said, “It’s driving us crazy. In this area, 60–70% of homebuyers take out loans to buy, and now people who had planned to move from jeonse to home ownership with a loan are completely stuck.”

A real estate agent near Hyundai Apartment in Geumcheon-gu commented, “There are virtually no jeonse listings left, monthly rents are soaring, and if loans are blocked on top of this, it’s like telling ordinary people to live on the streets. KB Kookmin Bank seems to have lowered its limit in line with government policy, and I expect other banks will follow.”

Buyer inquiries have dried up. A real estate agent near Riverside SK View Lotte Castle in Jungnang-gu said, “The mood on the ground is dire. Things were already tough, so I don’t know why they’re tightening further—are they trying to drive out people without money? Those who hoped to scrape together even 600 million won for a home now can’t do anything at all.” Another agent near Sanggye Jugong Complex 5 in Nowon-gu echoed, “In the end, it’s only the cash-rich who will be able to buy homes.”

As loan requirements become increasingly stringent, there are concerns that genuine buyers lacking their own capital will be pushed out of the market. Ham Youngjin, head of the Real Estate Research Lab at Woori Bank, commented, “It appears that banks have preemptively reduced some loans in line with household loan management quotas and the possibility of interest rate hikes in the second half of the year. Toward the end of the year, we may see even stricter loan restrictions from some financial institutions.” He added, “While this may not immediately trigger a freeze in small- and medium-sized home transactions, buyers’ own capital contribution will become ever more important when purchasing property.”

This content was produced with the assistance of AI translation services.