🚨 Analysis of Housing Mortgage Regulation Relaxation by Banks and Multi-homeowner Loan Conditions
Today Korean Economic News | 2025.03.11
📌 Banks Opening Housing Mortgages... Loan Conditions for Multi-homeowners Vary
💬 While banks have been lowering the threshold for housing mortgage loans this year, the extent of loan relaxation and conditions vary by bank. Especially for multi-homeowners, loan eligibility varies by bank, requiring careful advance verification.
1️⃣ Easy to Understand
Recently, banks have been easing housing mortgage loan conditions, but since each bank has different loan conditions, confusion is arising. Especially if you are a multi-homeowner, you need to be careful as some banks may allow loans while others might not. I will explain why this situation has occurred and how to deal with it.
Housing mortgage loans are loans received by putting up your house as collateral. In recent years, the government has strengthened loan regulations to curb real estate price increases and household debt growth. However, this year, these regulations are gradually being relaxed due to concerns about real estate market stagnation and economic slowdown.
The government relaxed some housing mortgage loan regulations at the end of last year, and financial authorities are encouraging banks to conduct autonomous loan screening. Accordingly, banks have begun to ease loan conditions based on their own judgment. For example, measures such as increasing LTV (Loan-to-Value ratio), opening doors to loans for people who have difficulty proving income, or easing restrictions on multi-homeowners are being implemented.
However, the problem is that these relaxation measures are being applied differently by each bank. Bank A offers loans to multi-homeowners, while Bank B still restricts loans to multi-homeowners. Also, Bank C allows LTV up to 70%, while Bank D limits it to 60%. This is because differences arise according to each bank's asset portfolio, risk management strategy, management policy, etc.
The differences are particularly pronounced for multi-homeowners. Some banks do not provide loans to multi-homeowners at all, or only allow them under very limited conditions. On the other hand, some banks apply relaxed policies, such as providing loans to multi-homeowners for houses that are not in speculative areas or overheated speculation zones.
Therefore, if you are considering a housing mortgage loan, especially if you are a multi-homeowner, it is important to compare the conditions of several banks. It is good to check accurate information through each bank's website or customer center, and if possible, receive direct visit consultations. Also, since policies can change frequently, it is necessary to continuously check the latest information. Housing mortgage loans have a large amount and a burden that must be repaid over a long period, so it is important to make a careful decision based on sufficient information.
2️⃣ Economic Terms
📕 Housing Mortgage Loan
Housing mortgage loans are financial products that use housing as collateral, significantly affecting the real estate market and household debt.
- Generally, they have lower interest rates and higher limits than credit loans, widely used for housing purchases or fundraising.
- Loan conditions vary depending on government real estate policies and financial regulations, and are also used as economic adjustment tools.
📕 LTV (Loan-to-Value ratio)
LTV (Loan-to-Value ratio) is an indicator representing the ratio of possible loan amount to the house price.
- For example, with LTV 70%, a maximum loan of 700 million won is possible for a 1 billion won house.
- The government controls the market by lowering LTV when the real estate market overheats, and raising it during stagnation.
📕 DTI (Debt-to-Income ratio)
DTI (Debt-to-Income ratio) is the ratio of annual debt repayment to annual income, a standard for evaluating a borrower's repayment ability.
- For example, with DTI 40%, a person with an annual income of 100 million won should not have annual debt repayments exceeding 40 million won.
- As a core indicator of loan regulation along with LTV, it plays a role in preventing repayment burden due to excessive loans.
📕 Multi-homeowner
Multi-homeowners are those who own 2 or more houses, subject to different loan regulation standards compared to actual residents.
- According to government real estate policies, taxes such as acquisition tax and comprehensive real estate tax tend to be strengthened, as well as loan regulations.
- For the purpose of suppressing speculative demand, restrictions on loans and additional taxes may be applied at certain times.
3️⃣ Principles and Economic Outlook
💡 Background and Significance of Housing Mortgage Loan Regulation Relaxation
The recent movement by banks to ease housing mortgage loans can be seen as a policy change in response to changes in the real estate market and economic conditions.
First, it is a measure to respond to the stagnation of the real estate market. Over the past 2-3 years, Korea's real estate market has shown a decrease in transaction volume and price adjustments due to factors such as interest rate increases and strengthened regulations. Price declines were particularly noticeable in provincial small and medium-sized cities and some metropolitan areas. This market stagnation led to a sluggish construction industry and contraction of housing transaction-related service industries, acting as a factor in economic slowdown. The government and financial authorities began to gradually ease real estate-related regulations to overcome this situation, and housing mortgage loan regulation relaxation can be seen as part of this.
Second, securing capacity due to slowed growth in household debt. Since 2021, due to strengthened loan regulations, the growth rate of household debt has significantly slowed. As a result, financial authorities have judged that they have secured a certain amount of leeway in managing household debt and have begun to allow banks more autonomous loan screening. In fact, the Financial Services Commission announced at the end of 2024 a household loan management plan, stating that they trust banks' own risk management capabilities and will ease excessive regulations.
Third, policy considerations for supporting actual residents and housing stability. Strengthened loan regulations also had the side effect of making it difficult for actual residents to purchase houses. In particular, as non-homeowners or first-time homebuyers struggled to raise funds, housing instability emerged as a social problem. In response, the government has pursued regulation relaxation centered on actual residents, implementing policies such as LTV relaxation for first-time homebuyers and preferential treatment for non-homeowners. Banks are also taking loan relaxation measures centered on actual residents in line with this policy direction.
Fourth, the possibility of transitioning to a low interest rate trend has had an impact. The interest rate hike cycle started by the Bank of Korea since 2022 has peaked, and the possibility of interest rate cuts has increased from 2025. In fact, since the beginning of 2025, commercial banks' housing mortgage loan interest rates have been showing a slight downward trend. This possibility of transitioning to a low interest rate trend is also affecting banks' loan policies and raising expectations that the loan market will become more active in the future.
Housing mortgage loan regulation relaxation proceeding in this background has various policy objectives such as real estate market activation, actual resident support, and economic recovery. However, risks such as household debt increase and real estate market overheating recurrence also exist, so banks are taking a cautious approach to easing loan conditions while strengthening their own risk management systems. This is also one of the main reasons why different loan conditions are applied by bank.
💡 Causes and Characteristics of Differences in Housing Mortgage Loan Conditions by Bank
Let's look at the reasons and characteristics of different housing mortgage loan conditions, especially loan policies for multi-homeowners, by bank.
First, there are differences in portfolio strategies and risk management policies by bank. Each bank has different strategies for asset portfolio composition. Some banks maintain a high proportion of housing mortgage loans, while others tend to focus more on corporate loans or other credit products. These differences stem from the bank's historical background, customer base, management strategy, etc. For example, banks that have signed agreements with the Korea Housing Finance Corporation and actively handle mortgage products may have more open policies for housing mortgage loans. Also, each bank's risk management philosophy and policy are important factors. Banks with conservative risk management take a more cautious approach to loans with potentially high risks, such as multi-homeowners.
Second, differences in regional business strategies and customer bases have an impact. Banks have different business strategies by region. Banks with strong foundations in specific regions will adopt loan policies that suit the real estate market situation and customer characteristics of that region. For example, banks with strong networks in provincial areas may be more active in loans for provincial real estate, which also affects policies for multi-homeowners. The bank's main customer base is also an important factor. Banks that cater to high-income professionals may design loan policies for multi-homeowners considering their demand for investment housing purchases.
Third, there are differences according to the bank's financial status and funding capabilities. The current financial status of a bank, especially BIS capital ratio and liquidity ratio, directly affects loan policy. Banks with sufficient capital capacity can adopt more aggressive loan expansion policies. Also, the bank's funding structure and costs are important factors. Banks with a high proportion of low-cost deposits can provide loans at relatively low interest rates, which can lead to the launch of more competitive housing mortgage loan products.
Fourth, there are differences in interpretation and response methods to government policies. Financial authorities' guidelines allow a certain autonomy, and each bank interprets and applies them independently. Especially, during a transition period when housing mortgage loan regulations are being relaxed, differences in the speed and direction of banks' policy changes can occur. Some banks react quickly to government policy signals and actively ease loan conditions, while others may take a more cautious approach. This is influenced by experiences from past policy changes, relationships with financial authorities, internal decision-making processes, etc.
Fifth, differentiation according to competitive environment and market share strategy is made. Banks implement differentiated loan policies to expand market share or target specific customer segments. For example, banks trying to increase their share in the housing mortgage loan market may present more aggressive conditions. Also, they develop customized loan programs according to strategies targeting specific customer segments (e.g., high-income earners, professionals, self-employed, etc.). This competitive environment also affects loan policies for multi-homeowners, with some banks using this as a differentiation point.
Thus, the fact that housing mortgage loan conditions differ by bank is a result of various factors working together beyond simple differences in business strategies, including each bank's history, customer base, risk management philosophy, financial status, competitive environment, etc. This diversity has a positive aspect of broadening the scope of choice for consumers, but at the same time, it can increase information search costs and cause confusion. Therefore, consumers considering loans need to make efforts to compare and review products from various banks to find the optimal loan conditions for their situation.
💡 Multi-homeowner Housing Mortgage Loan Strategy and Market Outlook
Let's look at strategies that multi-homeowners can take in the current complex loan environment and the outlook for the future housing mortgage loan market.
First, it is important to identify banks and products that are favorable to multi-homeowners. Currently, some major commercial banks completely restrict loans to multi-homeowners, while other banks allow loans under certain conditions. For example, there are cases where loans are restricted when purchasing additional houses beyond existing houses, but refinancing or additional loans for already owned houses are allowed. Also, some banks ease multi-homeowner loan restrictions for houses in regions that are not speculative areas or overheated speculation zones. Therefore, multi-homeowners should compare the policies of several banks and choose the bank that offers the most favorable conditions for their situation (number of houses owned, location, loan purpose, etc.).
Second, a strategic approach is needed to maximize loan conditions and limits. Multi-homeowners generally have more stringent regulations applied to LTV, DTI, etc. than actual residents. In this situation, to maximize loan limits, it is important to thoroughly prove income, manage credit scores, and establish good repayment plans for existing loans. Also, the timing of loan applications is an important factor. This is because more favorable conditions may be presented at specific times according to the bank's quarterly or annual loan targets. Additionally, selecting an appraiser favorable to housing price evaluation can help increase LTV limits.
Third, loan portfolio management and risk preparation are important. Multi-homeowners face greater risks due to loans for multiple houses, such as interest rate fluctuations and real estate market stagnation. Therefore, a strategy is needed to diversify risks by varying interest rate types (variable/fixed), maturity structures, repayment methods, etc. In particular, it is good to manage interest rate fluctuation risks by composing some loans with fixed rates and others with variable rates. Also, sufficient cash liquidity should be secured to prepare for unexpected situations (rental vacancies, housing price declines, interest rate increases, etc.).
Fourth, an approach considering taxes and comprehensive asset management is needed. Taxes such as acquisition tax and comprehensive real estate tax act as a significant burden for multi-homeowners. When deciding on housing mortgage loans, judgment from the perspective of overall asset management along with these tax elements is needed. For example, considering tax burden and loan interest costs, selling some houses may be advantageous, which can lead to improved loan conditions for the remaining houses. Therefore, it may be helpful to receive comprehensive advice from experts such as tax accountants and financial planners.
Fifth, the future housing mortgage loan market is expected to continue a gradual easing trend. Considering the policy necessity for real estate market activation and economic stimulus, and the possibility of interest rate cuts, housing mortgage loan regulations are likely to be gradually eased in the future. In particular, from mid-2025, restrictions on multi-homeowners are expected to be further eased, normalizing multi-homeowner loans in most regions except speculative areas and overheated speculation zones. However, since household debt management remains an important policy task, gradual and selective easing rather than rapid regulation relaxation is expected.
Thus, for multi-homeowners, housing mortgage loans are an important element of asset management and investment strategy beyond a simple funding means. In a complex and continuously changing loan environment, a strategic approach through accurate information collection, comparison of various options, expert advice, etc. is needed. Also, since the regulatory environment and market conditions continue to change, preparation to respond flexibly and long-term perspective planning are important.
4️⃣ In Conclusion
The movement by banks to ease housing mortgage loan regulations this year can be seen as a policy change for real estate market activation and economic recovery. However, as the degree and conditions of loan relaxation are being applied differently by each bank, consumers may experience confusion. Especially in the case of multi-homeowners, there are large differences, such as loans being possible at some banks while still being restricted at others.
The differences in loan conditions by bank are a result of various factors working together, including each bank's portfolio strategy, risk management policy, regional business strategy, financial status, interpretation and response method to government policies, and competitive environment. This diversity has a positive aspect of broadening the scope of choice for consumers, but at the same time, it can increase information search costs and cause confusion.
Consumers considering housing mortgage loans, especially multi-homeowners, need the following strategic approaches. First, they should compare loan conditions from several banks and choose the most favorable bank for their situation. Second, strategies are needed to maximize loan limits through income proof, credit score management, existing loan repayment plans, etc. Third, portfolio management to diversify risks by varying interest rate types, maturity structures, repayment methods, etc. is important. Fourth, judgment from the perspective of taxes and comprehensive asset management is needed, and it may be helpful to receive advice from experts if necessary.
The future housing mortgage loan market is expected to continue a gradual easing trend, considering the policy necessity for real estate market activation and economic stimulus, and the possibility of interest rate cuts. However, since household debt management remains an important policy task, gradual and selective easing rather than rapid regulation relaxation is expected.
In conclusion, consumers reviewing housing mortgage loans should accurately understand their situation (number of houses owned, income, credit rating, loan purpose, etc.) and carefully compare loan conditions from various banks. Especially in the case of multi-homeowners, as the differences in conditions by bank are large, more thorough advance investigation and preparation are needed. Also, since loans are a financial burden over a long period, decision-making should match one's long-term financial plan and real estate investment strategy, not just looking at short-term interest rates or limits.