[Exclusive] Over KRW 400 Billion in Loans Recalled in Four Months After Ban on Multi-Homeowners' Loan Extensions... Minimal Impact on Property Listings

Performance Review Through August After April 1 Regulations

37.7% of Matured Loans Collected... 600 Billion Won Rolled Over

6% of Matured Loans in Delinquency... Listing Surge Marginal

"Comprehensive Multi-Homeowner Crackdown Only Fue

It has been revealed that, just four months after the ‘April 1 Real Estate Policy’, over 400 billion won in housing mortgage loans (HMLs) have been recalled from multiple-home owners due to stricter loan regulations. Even with numerous exception clauses, 38% of matured loans have been collected, which is being interpreted as the policy being implemented swiftly.

However, 6% of the matured amounts were either not repaid in principal or became overdue due to missed interest payments. The government’s initial expectation of a surge in listings from multiple-home owners—as a result of tightening regulations—has not been clearly met. With all-encompassing regulations on multiple-home owners, including those on loans and taxes, causing a reduction in rental supply and thereby inducing instability in the leasing market, there are calls for a close review of the policy’s effectiveness.

After the ‘Principle Ban’ on HML Maturity Extensions for Multiple Home Owners... 420 Billion Won in Loan Recalls

According to data received on September 30 by Seonghoon Park, a member of the National Assembly’s Political Affairs Committee, from the Financial Supervisory Service, the total amount of housing mortgage loans recalled from multiple-home owners—from April 17, when maturity extensions were basically banned, until the end of August—was 422.29 billion won across 3,472 cases. During the same period, a total of 1.1176 trillion won in such HMLs matured (6,029 cases), and 37.7% of this matured amount was repaid.

Under the April 1 Real Estate Policy, the government prohibited maturity extensions for HMLs on apartments held by multiple-home owners in the Seoul metropolitan area and other regulated zones, and began recalling outstanding loans. The intent was to break the link between real estate and finance and induce multiple-home owners to put their properties on the market, thereby stabilizing housing prices. However, to account for potential impacts on the leasing market, exceptions were set for cases where tenants reside in the property, the owner is a registered rental business operator, or other cases serve a public interest. As a result, among the HMLs that matured during this period, 37% (2,217 cases) were allowed maturity extension. In value, these extensions totaled 628.43 billion won, which is about 56% of all matured loans.

The financial sector has assessed that the loan recall process is proceeding faster than expected. A commercial banking official commented, “Typically, HML borrowers manage their funds expecting they will be able to either renew or refinance their loans unless they sell their homes. Even in the face of an abrupt policy change that forced repayment, the collected amount exceeding 400 billion won is not insignificant.”

6% of Matured Loans Delinquent Due to Repayment Pressure... Concerns Over Increased Burden in a Sluggish Sales Market and Rising Interest Rate Environment

Many cases have emerged where repayment burdens led to delinquencies. Between April 17, when the regulation was introduced, and the end of August, a total of 340 cases, amounting to 66.85 billion won, became delinquent. This represents 6% of the total matured loans for the period. This figure includes cases where maturity extension was refused and the principal could not be repaid, as well as cases where maturity was extended but interest payments were missed. The Financial Supervisory Service stated, “Most delinquencies occurred because maturity was not extended.”

While banks believe that the current delinquency volume is not large and, since these loans are secured by real estate, the risk to soundness is limited, they also point out that a 6% delinquency rate relative to matured loans is not small. It is difficult to make a direct comparison with general delinquency rates, which are calculated based on total outstanding loans, but as of the end of June this year, the average delinquency rate for household loans at domestic banks was 0.40%, and the HML delinquency rate stood at 0.28%.

There are particular concerns that, if the policy continues amid a sluggish apartment sales market—especially in Seoul—and rising interest rates, delinquencies could increase further. Hyosun Kim, Senior Real Estate Specialist at KB Kookmin Bank, said, “If the apartment is in a high-demand area, liquidity can circulate, but for properties not in prime locations, even if the property is listed, it may not sell, which could make loan repayment impossible. For borrowers who want to repay but cannot, the situation—where they have to risk damaging their personal credit—is extremely harsh.”

The Policy’s Impact on Listings Also in Doubt... Criticism That ‘Comprehensive Regulation Only Heightens Leasing Market Uncertainty’

The anticipated surge in property listings from multiple-home owners—one of the primary aims of the government’s tougher lending restrictions—also appears to have been limited. According to real estate big data provider Asil, the number of apartment listings in Seoul fell from 75,650 on April 17 to 66,808 by the end of August, a decrease of 8,842. Listings in the three Gangnam districts (Gangnam, Seocho, and Songpa)—where multiple-home owner loan balances are high—increased by only 48, from 25,609 to 25,657 during the same period.

Analysts think the modest increase in listings in the three Gangnam districts is due more to temporary loosening or expected tightening of tax policies, rather than the loan regulations themselves. In fact, increases in apartment listings in Gangnam District were observed in late April to early May and after mid-August, coinciding with government announcements about temporary relaxations of capital gains tax surcharges and increased pressure from comprehensive real estate holding taxes.

There are also suggestions that comprehensive restrictions on multiple-home owners—including those on loans and taxes—have actually stirred instability in the monthly and yearly lease (jeonse/wolse) market, potentially fueling further price hikes. Jiyeong Yang, Specialist at Shinhan Premier Pathfinder, commented, “What matters more than the recalled loan volume is whether the measures drove sales. The loan restrictions may gradually normalize the leverage structure of multiple-home owners, but a series of these regulations are also amplifying instability in the leasing market, bringing negative side-effects to the real estate market overall.”

Assemblyman Park raised doubts, saying, “The artificial restrictions targeting multiple-home owners implemented by the Lee Jaemyung administration may only be aggravating borrower distress and financial market instability, rather than stabilizing the real estate market. The effectiveness and side-effects of the policy should be reviewed from square one, and the loan regulation policy should be thoroughly reconsidered.”

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