Lee Sung-hoon, president of the Korea Land & Housing Corporation (LH), said the 600 million won mortgage cap applied to homes priced at 1.5 billion won or less should be reduced to stabilize home prices. Because it takes time for new housing supply to come onto the market, he argued, lending rules are needed to manage buying demand. He framed the comments as his personal view, but they are expected to carry weight in the market given that he previously served as the presidential secretary for land and transport.
Lee made the remarks at a press briefing held on the 30th of last month alongside a visit to the semiconductor national industrial complex in Yongin, Gyeonggi Province. "Because there is inevitably a time lag in housing supply, I think this is the moment when lending restrictions are needed," he said. "More and more people feel burdened by continuing to extend and maintain loans of 600 million won each," he said. "We need to think about what benefits society and the community."
Under current rules, the mortgage cap for home purchases in the capital region and designated regulated zones is 600 million won for homes valued at 1.5 billion won or less. First-time buyers can borrow up to a loan-to-value (LTV) ratio of 70%. "People are said to be competing to buy homes by borrowing the full 600 million won up to the 70% LTV limit," Lee said. "If home prices rise this way, it will be bad for the community."
Lee drew a line, saying there had been no discussions with the Financial Services Commission or the Ministry of Economy and Finance, the agencies responsible for lending rules. Still, he is seen as part of the "Gyeonggi line" in the government's real estate policy, along with Land, Infrastructure and Transport Minister Hong Ji-sun and Korea Real Estate Board Chairman Lee Heon-wook. His remarks carry particular weight because he is the only one of the three who came up through the land ministry as a career official and also served as presidential secretary for land and transport.
Meeting reporters after the briefing, Lee said of a possible reduction in the 70% LTV for first-time buyers: "It would be right to reduce it, but it is a young adults' issue and therefore ambiguous, so I will describe it as a triangle." On in-house loans at companies such as Samsung Electronics, he said, "If it is possible, it is right to regulate them." He said LH's own staff loans are also set above government guidelines, and that the agency would discuss bringing them in line with the standard in consultation with its labor union. He added that it would not be easy, since the matter requires agreement between labor and management.
