The government plans to strengthen loan regulations and reduce the connection between real estate and finance to improve the structure of household funds concentrated in real estate. The guarantee for jeonse loans will be gradually reduced, except for certain groups, and the scope of the Debt Service Ratio (DSR) will be expanded step by step.

The Ministry of Finance announced these measures as part of its '2026 Second Half Economic Growth Strategy' on July 14. Lee Hyung-il, the first vice minister of finance, stated, "We are seeking institutional improvements to internalize social costs, such as increasing the burden on high-risk mortgage loans and imposing additional capital reserve obligations. We are preparing to gradually reduce loans related to real estate policies and guarantees related to real estate."

Initially, the government will tighten loan regulations for non-resident homeowners who purchase properties for speculative purposes and will gradually expand the application of DSR. DSR is a system that determines loan limits based on the ratio of a borrower's annual income to their principal and interest repayment amounts. The government plans to enhance loan management focused on the borrower's repayment ability by expanding DSR application in loan assessments.

Additionally, the government will strengthen the soundness management of high-risk mortgage loans. It plans to increase the burden on financial companies for high-risk mortgage loans and is considering imposing additional capital reserve obligations. This aims to reduce the financial sector's exposure to real estate-related risks.

Policy financing will also undergo adjustments in its criteria and operational methods. The income requirements for policy loans will be revised to use the median income standard instead of the existing method, rationalizing the support targets. Total management of policy loans will be strengthened to enhance the efficiency of resources.

Measures to alleviate excessive demand for policy financing during periods of rising market interest rates are also included. To achieve this, the government plans to adjust the interest rates of fund loans more flexibly to maintain an appropriate interest rate difference between banks' own mortgage loans and policy financing.

The jeonse loan guarantee system will also be reformed. The government will gradually lower the guarantee ratio for borrowers, excluding young people without homes and vulnerable groups, to reduce the scale of guarantees. This action reflects concerns that jeonse loan guarantees lead to excessive leverage in the jeonse market.

Furthermore, the government will strengthen the guarantee requirements for the jeonse deposit return guarantee system. The Ministry of Finance plans to gradually lower the jeonse rate requirements for guarantee enrollment and adjust the guarantee fee rates based on the actual occurrence rate of guarantee accidents. This aims to enhance the sustainability of the guarantee system.

Policies to improve the capital market will also be pursued. The government plans to establish a productive finance Individual Savings Account (ISA) to guide the flow of funds into productive finance and allow foreign investments in exchange-traded funds (ETFs). A fact book containing the current status of productive finance will be regularly published to provide relevant information to the market.

The Ministry of Finance explained that these measures aim to alleviate the real estate-centered financial structure and encourage funds to shift towards productive areas such as corporate investment and capital markets. Additionally, it plans to establish detailed systems to manage the increase in household debt stably while enhancing the soundness of the financial system.

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