Financial Services Commission Refutes False Mortgage Ban Rumors
South Korea’s financial regulator plans to request a police investigation into the circulation of unverified online claims that housing-backed loans for properties valued over 1.5 billion won are subject to an outright ban, newspim.com reported. The false posts triggered confusion among prospective homebuyers by alleging that the government was preparing to slash loan limits across various price brackets, reducing caps to between 200 million and 400 million won for lower-priced homes.
FSC Denies Rumors and Reaffirms Mortgage Caps
The Financial Services Commission dismissed the online rumors as entirely false and stated that it will take strong action against the spread of misinformation. Lee Eok-won reaffirmed during a parliamentary audit that the rumors carry no truth, echoing a prior denial posted to his account on X, formerly known as Twitter. Current maximum mortgage caps for purchasing homes in regulated metropolitan areas stand at 600 million won for properties valued at or below 1.5 billion won, 400 million won for homes priced between 1.5 billion and 2.5 billion won, and 200 million won for properties exceeding 2.5 billion won. Actual borrowing amounts depend on calculations involving the Loan-to-Value and Debt-Service-Ratio limits rather than an outright prohibition based solely on a 1.5-billion-won valuation.
Past Fabrications Mirror Previous Mortgage Curbs
Similar fabrications surfaced previously, including a June post detailing an alleged comprehensive real estate policy that sought to lower jeonse loan limits and ban mortgages for homes worth more than 2.5 billion won, prompting a similar denial and investigation request from the Ministry of Land, Infrastructure and Transport. Market observers note that rumors of complete mortgage bans gain traction because past government policy actually implemented strict curbs, such as the December 16 measures in 2019 that banned housing purchase mortgages for apartments exceeding 1.5 billion won in speculative zones. That 2019 policy triggered a balloon effect where buyers shifted demand toward properties sitting just below the regulatory threshold while sellers adjusted asking prices. Under that same 2019 measure, Loan-to-Value limits for homes priced above 900 million won were applied differentially, setting the rate at 40% for the portion up to 900 million won and 20% for the amount exceeding that threshold, which meant the maximum loan amount under the Loan-to-Value limit for a 1.5-billion-won apartment was 480 million won. Existing real estate transactions are currently slowing down amid reduced purchasing power and a lack of available inventory, according to Nam Hyuk-woo, a real estate researcher at Woori Bank, who noted that price growth is moderating across Seoul neighborhoods like Seongbuk, Dongdaemun, and Seodaemun as the market catches its breath.
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