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Authorities to crack down on irregular home transactions amid tighter loan curbs

Published: 03 Jul. 2025, 17:47

Apartments in Seoul on June 29. [YONHAP]

Korea's financial authorities said Thursday that they will crack down on irregular and unusual home transactions amid tightened curbs on mortgages aimed at reining in soaring home prices.

They will focus on transfers of homes to offspring at lower prices and home transactions backed by loans extended to fund businesses.

Starting this month, mortgage loans of 600 million won ($441,000) or above to buy homes are banned in the wider capital area as home prices have not shown signs of easing in recent months.

Also, tighter debt-to-service ratio (DSR) rules have been applied to virtually all kinds of household debts since the beginning of this month, while the stress interest rate has been raised to 1.5 percent from 0.75 percent on loans extended in the greater Seoul area.

Household loans extended by major banks spiked by the most in 10 months in June, largely driven by a sharp increase in mortgages, industry data showed earlier.

Outstanding household loans extended by five major commercial banks, including KB Kookmin Bank, Shinhan Bank and Hana Bank, stood at 754.83 trillion won at the end of last month, up 6.7 trillion won from a month ago, according to the data.

The June tally marks an acceleration from May's 4.99 trillion-won on-month increase and the sharpest gain since August last year, when the comparable reading was 9.62 trillion won.

Banks had eased some of their lending regulations at the beginning of the year, while demand for loans increased during moving season.

The Seoul municipal government had also lifted part of the so-called land transaction permission zones imposed in some areas of Seoul's highly sought-after Gangnam, Seocho and Songpa districts in February, leading to a marked increase in real estate prices in such areas, which in turn fueled household loans.

The banks' mortgage loans increased 5.76 trillion won last month, accelerating from the previous month's 4.23 trillion-won gain, according to the data.

Yonhap