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Mortgages Tighten Purses

18:25 June 05, 2017 replay time01:56

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Seoul's apartment prices continue to grow.

The problem is that household debt is snowballing as well, which is why the new administration's measures for household debt scheduled to be arranged by August are gathering much interest.

Lee Kyeong-tae has more.


Seoul's apartment prices are rising sharply.

The increase in apartment prices was 0.35% after the election, recording the highest in seven months.

Housing prices nationwide in May are 0.14% higher than the previous month as well.

The market's prediction that the real estate market will drop since the new administration's real estate policy focuses more on housing welfare than development was proven to be off the mark.

More than anything, the government is expressing concern about people choosing to take out loans to buy houses.

On the 1st, President Moon Jae-in directed "all relevant authorities to prepare joint comprehensive management measures for household debts by August."

With household debts in the first quarter currently at 1,360 trillion won, the highest in history, there are concerns on pressures felt by ordinary people to repay debts.

The measures possible for review by the government can be summarized into three possibilities.

They are to strengthen the loan-to-value ratio and debt-to-income ratio standards that were alleviated by the former administration, raise the threshold of bank loans, and designate overheated speculation zones like the Gangnam Ward of Seoul.

Yet they have to remember lessons from the past, when pressing down on housing prices put the trading market into a wait-and-see attitude and caused deposit prices to rise again.

With people opting to buy houses because of the sharply rising key money deposits, preventing loans may leave ordinary people with no options.

It seems delicately sorting out the actual demand from speculation and preventing capital from flowing into real estate will be the essence of the new administration's household debt policy.

Lee Kyeong-tae reporting for Yonhap News TV.

Yonhap News TV: 02-398-4441 (Inquiry on article) 4409 (Report), KakaoTalk/LINE jebo23

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