Financial Authorities Accelerate Financial Support for Housing Supply, Hold Weekly Review Meetings

Detailed Guidelines on PF Equity Ratio Regulation Suspension to Be Announced in September

Restructuring Syndicated Loans and Creating Additional Sector-Driven Financial Funds

Financial authorities will announce detailed measures this month to temporarily suspend the real estate project financing (PF) capital adequacy ratio regulation in order to accelerate housing supply. They are also expediting the expansion of syndicated loans and the establishment of additional sector-specific funds in the financial industry. As more than half of the supply-related initiatives under the August 13 real estate policy have been completed, authorities plan to quickly finalize the remaining regulatory improvements and hold weekly review meetings to intensively manage implementation.

On September 9, the Financial Services Commission held a "Financial Support Measures for Promotion of Housing Supply Review Meeting," chaired by Director Jeon Yoseop of the Financial Policy Bureau. During the meeting, participants discussed progress on 21 detailed supply-side initiatives from the August 13 plan and future steps forward.

First, as previously announced, financial authorities will temporarily suspend the PF capital adequacy ratio regulation for housing projects for two years. Consequently, they plan to assess the impact of deferring subsequent prudential enhancement measures—such as risk weight adjustments, provisioning, and lending restrictions—on the PF market, while collecting feedback from the financial and construction industries. Detailed measures are expected to be announced as early as September. However, regulations for non-residential projects, which have relatively higher delinquency rates, will be introduced as planned in 2027, and existing sector-specific prudential regulations will remain in place.

The scope of investment targets and structures for syndicated loans will also be revised. Financial authorities are currently holding regular working meetings with banks and insurance companies and will develop detailed improvements to investment targets and structures based on feedback from the field.

Monitoring of PF project sites will also be intensified. With responsible managers assigned for each site and key sites selected for close supervision, authorities will step up on-site management to ensure that it leads to actual housing supply. In particular, by linking with the PF and construction company financial support center launched on September 1, they will promptly identify and address financing difficulties at project sites.

The financial industry will also establish additional sector-specific funds, currently amounting to 7.3 trillion won. The authorities are gathering sector-by-sector plans, and the securities sector alone expects to add 2.1 trillion won in new funds by the end of the year.

Support funds to normalize PF operations managed by Korea Asset Management Corporation (KAMCO) will also be expanded. If the related 500 billion won budget for 2027 passes the National Assembly this year, a call for fund managers will be issued in October, with selections completed by the end of the year. Of the first fund (totaling 1.1 trillion won), 813.7 billion won has already been invested, and the remaining funds will be executed quickly, primarily for housing projects.

For PF guarantees, new products will be introduced to cover redevelopment and rental business operators. Additionally, authorities will pursue guarantee agreements with sectors such as insurance.

Previously, financial authorities announced 21 supply-side initiatives in the August 13 plan, with 12 of them implemented last month. These include expanded PF guarantee supply, reduced guarantee fees, and more reasonable calculation methods for the loan-to-value (LTV) ratio on relocation loans.

Director Jeon emphasized, "It is crucial that the improved regulations and measures announced following the August 13 plan lead to an actual expansion in housing supply. To ensure the speedy implementation of supply initiatives, we will institutionalize weekly review meetings for the time being and will do our utmost to support housing supply from the financial side."

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