Banks see surge in new mortgages
According to the banking industry, new mortgages have surged nearly threefold since changes took effect early this month.
Standard Chartered Korea said on Monday that applications for mortgages as of last Friday reached 927.5 billion won ($913.5 million), about three times higher than the same period last month.
“After the LTV and DTI ratios were relaxed, consumers are increasingly asking for mortgages,” the bank said in a press release. “Most consumers with no defaults will be able to get loans for up to 70 percent of the price of the property.”
KB Kookmin Bank said its mortgages also are also on the rise. The total value of outstanding mortgages grew from 82.16 trillion won in July to 82.76 trillion won this month.
Woori Bank said total mortgages recorded in August were 57.6 trillion won as of yesterday compared to 56.3 trillion won last month.
According to data compiled by the Financial Supervisory Service, the total amount of mortgages increased 2.7 trillion won across all financial institutions in July.
In order to liven up the real estate market, the second economic team of the Park Geun-hye administration led by Choi Kyung-hwan, deputy minister for the economy, decided to raise the ceiling on the LTV and DTI ratios. The LTV has been raised to 70 percent for all financial institutions, while the DTI will be fixed at 60 percent regardless of region, age and income.
The LTV, a gauge used by banks to determine the maximum amount of a home-backed loan based on the market value of the property, was 50 percent for Seoul and metropolitan areas on average and 60 percent in rural regions.
The DTI ratio, used to determine the maximum mortgage based on a borrower’s income, was 50 percent in Seoul, 60 percent for metropolitan areas in Gyeonggi and 40 percent for the districts of Seocho, Gangnam and Songpa, where speculation was rampant during the time of the Roh Moo-hyun government.
According to the Ministry of Land, Infrastructure and Transport, apartment prices in Seoul metropolitan areas rose for the eighth consecutive month.
Although data on housing transactions for August is not yet available, it is clear that since last month they have started to rise.
Data by the ministry showed that 132,095 housing transactions, including purchases, two-year leases and monthly rents, were made in July across the nation.
The figure is up 17.7 percent from June.
Compared to the same month last year, it surged 22.5 percent.
The Korea Appraisal Board also said yesterday that apartment prices in Seoul metropolitan areas inched up 0.14 percent this week compared to last week and 1.41 percent year-on-year.
“The LTV and DTI easing and the latest key interest rate cut are having a real impact on the market,” said an official at the board.
BY SONG SU-HYUN [firstname.lastname@example.org]
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