The move would mark a limited adjustment rather than a reversal of Seoul's household-debt crackdown, seeking to preserve curbs on leveraged property purchases while easing financing constraints on owner-occupier buyers.
Deputy Prime Minister and Minister of Finance and Economy Koo Yun Cheol said Friday that the government was considering "targeted support" for low-income and genuine homebuyers facing difficulties under existing lending rules.
His remarks came after an interviewer raised criticism that restrictions had tilted the housing market toward cash-rich buyers, particularly in expensive areas such as Seoul's Gangnam district.
Koo cited young people, newlyweds and households without homes as potential beneficiaries and said the government would soon announce additional housing-supply and financial measures.
Seoul has tightened housing finance as part of a broader effort to slow household debt and reduce the flow of credit into property.
Mortgage loans for home purchases in Seoul and other regulated areas are capped at 600 million won ($422,000) for properties worth up to 1.5 billion won, 400 million won for homes valued between 1.5 billion won and 2.5 billion won, and 200 million won above that level. Loan-to-value ratios for buyers without homes in regulated areas are capped at 40 percent.
The government has also set a 1.5 percent ceiling on growth in regulated household lending this year, down from 1.7 percent in 2025, as it seeks to push the household debt-to-GDP ratio toward 80 percent by 2030.
Those measures have drawn opposition criticism that rules designed to deter speculative borrowing can also penalize households that rely on mortgages to enter the housing market.
People Power Party floor leader Song Eon-seok said last month that a 600 million won mortgage ceiling was insufficient for first-time buyers when Seoul apartment prices had risen far beyond the amount that could be financed under the rule, arguing that the policy was shutting genuine buyers out of homeownership.
The squeeze has been reinforced by banks' own efforts to stay within annual lending targets.
Data obtained by PPP lawmaker Lee Yang-soo from the Financial Supervisory Service showed that non-mortgage household loans at Korea's five largest banks increased by 3.47 trillion won in the first half, more than three times their combined target of 1.09 trillion won.
With credit and other loans exceeding planned levels, banks have increasingly tightened mortgages, which are larger and easier to control, to keep overall household lending within regulatory targets — raising concerns that homebuyers could bear the cost of borrowing growth elsewhere.
Financial authorities have consequently been considering whether lending to young people, newlyweds and first-time buyers, as well as some final-payment loans for newly built homes, should be excluded from banks' aggregate household-loan limits or placed under separate quotas.
Any adjustment is expected to remain narrowly targeted. Existing discussions have focused on changing how qualifying loans are treated under banks' annual lending caps rather than broadly easing loan-to-value or debt-service-ratio requirements.
That leaves Seoul trying to resolve a tension at the heart of its housing policy: restraining credit strongly enough to contain household debt and property prices without making access to homeownership increasingly dependent on how much cash a buyer already has.
Koo said the government would also seek to accelerate housing supply, including non-apartment homes that can reach the market faster than new apartment projects, with further housing and financial measures to be announced soon.
__________________________________________________________________________________
AJP Takeaways
South Korea is preparing targeted mortgage relief for young, newlywed and first-time homebuyers after tighter lending rules drew criticism for restricting genuine buyers as well as speculative demand.
Seoul currently caps home-purchase mortgages by property value and is limiting regulated household-loan growth to 1.5 percent in 2026, while banks have tightened mortgages further to stay within their own lending quotas.
The government is considering exemptions or separate quotas for eligible homebuyer loans rather than a broad rollback of LTV or DSR rules, aiming to improve access to housing without reigniting household debt or property prices.
Copyright ⓒ Aju Press All rights reserved.
