[Second Half Growth Strategy] "Ultra-Innovation Economy Fund" to Be Launched... Lending Regulations Tightened for Speculative Non-Resident Single-Home Owners

Establishing Indirect Investment Division under the National Growth Fund
Reduced Jeonse Loan Guarantees Except for Young People Without Homes

The government will establish a so-called “Ultra-Innovation Economy Fund” under the National Growth Fund next year to invest in sectors such as advanced materials and components, climate, and energy, as part of its efforts to nurture future industries. The policy of “decoupling real estate and finance” will also continue, with strengthened lending regulations for single-home owners who are non-residents and a lower government guarantee ratio for jeonse loans, except for young people without homes and vulnerable groups.

On July 14, the Ministry of Economy and Finance, in cooperation with the Financial Services Commission and other related ministries, announced the “Economic Growth Strategy for the Second Half of 2026,” which includes these measures.

The government will establish the Ultra-Innovation Economy Fund within the indirect investment division of the National Growth Fund. Funding will be sourced with 30-40% from the Advanced Strategic Industry Fund within the National Growth Fund and 60-70% from capital raised by private asset management companies. The fund is structured so that when the National Growth Fund makes a seed investment in a particular company, the Ultra-Innovation Economy Fund will make a follow-up investment at double the scale. Targets for investment will be selected primarily from industries that overlap between the 12 national advanced strategic industries supported by the National Growth Fund and the 15 ultra-innovative economic sectors designated by the Ministry of Economy and Finance.

A government official stated, “The aim is to supply public and private capital to ultra-innovative enterprises more quickly and flexibly,” and added, “The fund size and specific operation methods will be determined after consultation between the Ministry of Economy and Finance and the Financial Services Commission.”

The second tranche of the National Growth Fund for National Participation, amounting to 600 billion won, will also be launched at the end of August or beginning of September. This follows the first fund being fully subscribed and demand for additional investment exceeding expectations.

To promote the commercialization of advanced technologies, the government will also launch a pilot insurance program next year to cover risks that may occur from prototype demonstration through the early stages of commercialization.

Decoupling real estate from finance has also been presented as a core task for the second half of the year. The government plans to prepare lending regulations for single-home owners who are non-residents, with strong consideration being given to restricting or prohibiting jeonse loans. After collecting opinions through a government-led “Real Estate Relay Forum” beginning on July 14, detailed regulatory measures are set to be announced at the end of the month.

In line with the continued effort to tighten lending regulations, the government is considering expanding the scope of the Debt Service Ratio (DSR) and imposing additional capital reserve requirements on banks for high-risk mortgage loans. It was also presented as a policy direction to lower the guarantee ratio for jeonse loans, except for young people without homes and vulnerable groups (currently 80% in the capital and regulated regions, 90% in other regions), as well as to adjust the required jeonse-to-price ratio and guarantee fee. However, the timing and implementation will be determined after comprehensively reviewing market conditions and other factors.

For policy loans such as Bogeumjari Loan and Didimdol Loan, the government is considering easing income requirements for newlyweds to eliminate “marriage penalties,” while tightening the requirements for others by reflecting inflation and household size, thereby reviewing a reduction in the scope of support.

In addition, the government will continue to promote inclusive finance by expanding small, low-interest, long-term loans and the supply of “Sunshine Loans” for individuals with mid- to low-credit, as well as by putting forth measures within this month to improve the management of overdue receivables at public financial institutions. Plans also include promoting the conversion of variable-rate loans to long-term, fixed-rate loans to prepare for potential interest rate hikes.

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