Financial authorities are considering a plan to provide relief to genuine homebuyers who do not meet the standard criteria for first-time housing loans through individual reviews by bank loan review committees. The proposal aims to allow these committees to judge exceptional cases that cannot be uniformly covered by laws and regulations.
According to financial authorities on the 28th, the Financial Services Commission is examining a plan where bank loan review committees would assess individual circumstances if unavoidable situations are recognized, even when formal requirements for first-time housing loans are not met. Matters difficult for banks to judge will be escalated to financial authorities for additional decision-making.
Financial authorities plan to further specify in the future the scope of relief—such as for the so-called 'Kangaroo Family' (adult children living with parents) and heirs to small residential shares—and what evidence will support granting exceptions. The approach is to consider the potential for system abuse and opinions from various stakeholders to establish detailed review criteria.
Under current financial industry supervision regulations, all members of a household must have no prior history of owning a home to qualify for a first-time housing loan. Adult children living in the same household as parents who own a home are not considered first-time homebuyers and cannot receive LTV preferential treatment, even if they do not own a home in their own name.
Being recognized as a first-time homebuyer allows borrowers to secure a housing loan of up to 70% of the property value even in regulated areas. However, if classified as a household owning one home (including parents' homes), the standard LTV of 40% applies. For a 1 billion won house, the LTV limits would be 700 million won and 400 million won respectively, creating a maximum difference of 300 million won. These borrowers also face a maximum limit of 600 million won in regulated areas.
Financial authorities have not ignored the loan difficulties faced by unmarried children living with their parents. The Financial Services Commission improved regulations in 2022 requiring that if an unmarried child takes out a housing loan to purchase a home and moves out, they must sell the parents' home as well. If the child moves into the new home within three months of obtaining the loan, the obligation to dispose of the parents' home is waived. However, this did not recognize the child as a first-time homebuyer.
This discussion gained momentum following a national real estate policy forum chaired by President Lee Jae-myung on the 23rd, where newlywed couples shared stories about being unable to receive first-time benefits due to inherited property shares from their minor years. President Lee said, "In such cases, it would be good to introduce a form of citizen committee to review and make decisions."
Subsequently, at the forum chaired by Jeon Nal (Prime Minister), Financial Commission Chairman Lee Eoung-won stated, "How about having bank loan review committees collectively discuss these cases and allow them if they seem reasonable?" This represents concretizing the citizen committee concept by utilizing banks' existing review systems.
Financial authorities are also examining issues such as group final payment loans that were blocked due to household loan volume management by banks, despite borrowers having established funding plans based on past sales contracts or resident recruitment announcements. Currently, separate relaxation measures for housing loans specifically for final payments in newly signed general home sales transactions are not under review.
The Financial Services Commission's loan policy based on the real estate forum is expected to be announced separately from the Ministry of Land, Infrastructure and Transport's supply measures and the Ministry of Economy and Finance's tax reform plan. The final version is anticipated to be released by next month at the latest.
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