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Gov't housing regulations to ease starting Friday Updated: 2014-08-01 06:28:43 KST

Gov't housing regulations to ease starting Friday

Some government regulations on the housing market are being eased starting Friday, and the Korean economy is expected to start feeling the effects in the latter half of this year.
The changes include easing measures that limit the amount that people can borrow from banks when buying a house, depending on various economic variables including income.
The loan-to-value and debt-to-income, or LTV and DTI ratios are being raised to 70 percent and 60 percent, respectively.
This means home buyers would be able to borrow up to 340-thousand U.S. dollars, up nearly 100-thousand dollars from the current total, when buying a house worth 488-thousand dollars.
They'll also feel less pressure to turn to non-banking institutions that charge them higher interest rates.
The policy has already started to bring some vitality into the housing market.
The number of housing transactions in Seoul shot up in July, which is traditionally an off month for home buying.
The Financial Supervisory Service says the amount of housing mortgage loans increased by 80 percent in June from the previous month to 475 million U.S. dollars, the highest amount in 12 months.
But the new moves are also being met with concern.
It's feared the deregulatory moves may lead people in their 50s or older into more debt.
Last month, the amount of housing mortgage loans for people in those older age groups increased an average of 20 percent from two years earlier, this according to data from Korea's four major commercial banks.
They were apparently trying to pay back debt accrued from self-employed businesses and from losses incurred after failing to sell houses amid falling prices.
Kim Ji-yeon, Arirang News.
KOGL : Korea Open Government License
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