Confusion Grows Over Group Closing Loans... Banks Request 'Guidelines,' Government Says 'No Issues'

Will Banks That Engaged in 'Aggressive Lending' Early in the Year Face Penalties?
"That Will Not Happen," Authorities State

After the government's announcement of new real estate measures, the financial industry requested clear guidelines on group mortgage loans for apartment complexes, but the financial authorities showed reluctance to provide them. However, the government emphasized that there will be no disruption in executing group loans for approximately 70,000 households scheduled to move in during the second half of this year.

Additionally, the government asserted that banks that have based their business strategies on the previous household loan growth rate target of 1.5%, after the upward adjustment of the target to 3%, will not face any disadvantages as a result of this change.

The Financial Services Commission held a press conference titled "Q&A on Comprehensive Financial Measures for Stabilizing the Real Estate Market" at Government Complex Seoul in Jongno-gu, Seoul, on August 14, 2026. The press conference lasted for about 1 hour and 50 minutes.

At the briefing, Yoon Dukki, head of the macro-finance team at the Financial Services Commission, explained the management plan for group loans following the adjustment of this year’s household loan growth rate target. Yoon stated, "The loan limit for each financial institution will not simply double across the board," and added, "We will determine specific allocation methods through consultations with the financial sector." He continued, "There will be no issues with the execution of loans for approximately 70,000 households scheduled to move in during the second half of this year."

Concerns were raised at the site that some financial institutions, having actively executed loans in the first half due to the adjustment of the government’s household loan target, may face relatively less capacity for additional lending in the second half. This raised additional concerns among consumers that a "loan open run" phenomenon—where demand for loans surges as year-end approaches and limits become exhausted—could worsen.

Regarding this, Team Leader Yoon explained, "Each bank has a different loan execution strategy, and some may have concentrated their lending during the first half." He added, "The authorities have never instructed the banks to evenly execute one-twelfth of their annual allocation each month over 12 months, nor is there any need to set such a guideline." He also stated, "Rather than the authorities directly setting additional lending targets, banks will allocate them in accordance with their own business strategies."

Meanwhile, regarding the ban on loans to speculative non-resident single-home owners, it was pointed out that granting each bank’s credit review committee discretion has led to greater uncertainty for front-line financial institutions. The authorities reiterated their existing stance that it is difficult to provide uniform guidelines on this matter.

Yoon added, "Since 2018, each bank has operated its own credit review committee and has accumulated sufficient know-how to independently decide on ambiguous cases. Still, if there are unclear parts during the review, the authorities will provide an official interpretation." He continued, "The content of these interpretations is shared and applied across the entire financial sector," and clarified, "No additional guidelines have been established at the authorities’ level, as of now."

Regarding questions about countermeasures for repaying credit loans such as revolving credit lines, he answered, "Banks are also struggling with this issue, but it is not something the authorities can mandate."

He also took a clear stance against concerns that banks which conducted their business according to previously suggested time-specific lending targets might be disadvantaged. Yoon explained, "The authorities adjust individual targets through rigorous one-on-one consultation with each bank," and added, "For example, simply exceeding seven-twelfths of the total target by the end of July will not automatically result in a penalty; instead, a flexible judgment will be made in line with previously agreed-upon time-specific targets."

Separately, the government offered clarification after the "Youth Future Bogeumjari Loan"—a program that supports home purchases such as villas under 400 million won for first-time buyers aged 39 or younger—faced criticism that it was effectively telling young people to live in villas instead of apartments.

According to the Financial Services Commission, as of last year, only 28.3% of young households renting on a monthly basis lived in apartments, while 71.7% lived in non-apartment housing. However, if the upper threshold of 400 million won is maintained, only 7.8% of relevant properties in Seoul and 28.2% in the metropolitan area fall under the program, leading to continued criticism that its effectiveness is limited.

Yoon emphasized, "Young people wishing to buy apartments can still use the existing Bogeumjari Loan or the Didimdol Loan. The Youth Future Bogeumjari Loan was newly established as an 'additional' product for young people who have not benefited from existing policy-backed loans," he said.

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