Buyers Rush to Move Up Closing Dates Amid Fears Mortgage Loans Could Be Restricted

A buyer identified as A, who purchased an apartment in Seodaemun-gu, Seoul, recently moved up the closing date from the end of July to early July after consulting with a real estate agent. The buyer advanced the date to avoid any possible damage after the prospect of additional mortgage loan restrictions was raised.
As the possibility of further lending restrictions has emerged, more apartment buyers are bringing forward their closing dates. Brokerage offices are receiving a steady stream of calls from clients asking to adjust schedules because of loan issues.
According to the industry on the 24th, the financial authorities activated an emergency management system at the Household Debt Review Meeting on the 11th after household lending surged. As a result, the barriers to mortgage loans and unsecured loans are expected to rise. The market is already pricing in the tighter lending rules.
A licensed real estate agent in Seodaemun-gu said, "There have been cases recently where the closing date was adjusted to June 30," adding, "People do not want to go beyond July because they have heard that additional lending restrictions could come in July."
A licensed real estate agent in Geumcheon-gu also said, "Since mortgage lending has a set total limit, it becomes harder to get a loan as the second half of the year approaches," and added, "We are getting inquiries from people asking whether they should buy a house before July because the lending rules could change."
In Seoul, under the October 15 measures introduced last year, mortgage loans are capped at 600 million won for apartment sale prices of 1.5 billion won or less. The limit is reduced to 400 million won for homes above 1.5 billion won and to 200 million won for homes above 2.5 billion won. With worsening rental conditions and a shortage of supply, end users are increasingly turning to mid- to low-priced apartments under 1.5 billion won, where borrowing limits are relatively higher.
In the actual transaction market, demand is concentrating on listings in price ranges where borrowing is possible. Apartment sales in Seoul totaled 7,282 in May, down 15.2% from the previous month. By contrast, the share of transactions for homes priced at 1.5 billion won or less rose to 76.4% during the same period, up 0.4 percentage point from 76% the previous month.
In particular, dependence on loans remains high when buying homes in Seoul's outer districts. According to the Court Registration Information Plaza, the average loan ratio for Seoul multi-unit residential buildings in May stood at 49.01%. In the three Gangnam districts, where high-end apartments are concentrated, the figure was only in the 20% to 30% range, while outer districts with more mid- to low-priced apartments were above the Seoul average. Gangnam-gu had the lowest loan ratio at 29.44%, while Geumcheon-gu recorded the highest at 63.02%.
As it remains unclear whether additional lending restrictions will be introduced, what the measures will include, and when they will take effect, the market is expected to stay focused on policy announcements for the time being.
A licensed real estate agent in Mapo District said, "Recently, there have been more cases in which contract schedules are changed or canceled because of loan issues during home purchases," adding, "With interest rate fluctuations also expected, delays can arise during the loan review process."
act@fnnews.com Choi A-young Reporter