Will second housing forum address targeted easing of mortgage rules?

Attention is focused on whether targeted deregulation measures for genuine homebuyers — particularly young people and newlyweds — will be raised at the second National Forum on Real Estate Policy, set to be chaired by Prime Minister Han Seong-sook Monday afternoon. As housing prices continue to surge, President Lee Jae-myung has repeatedly called for "pinpoint support" for real-demand buyers, and authorities are now reviewing a plan to exempt such borrowers from the overall household loan volume management framework.

As of 3 p.m. Monday, the government's real estate forum discussion board had received more than 7,300 posts. More than 1,700 additional submissions have come in since the roughly 5,600 posted before the first forum, reflecting sustained public engagement with housing policy. More than 100 of those posts specifically call for easing restrictions on policy-backed loans — including the Bogeumjari loan — for real-demand buyers such as young adults and newlywed couples.

One non-homeowning resident of the greater Seoul area who posted on the forum website wrote that they had tried to purchase a small apartment for the first time, only to be told they could not use the Bogeumjari loan because the financial institution's assessed market price exceeded the 600 million won ($409,000) sale price. "Please apply differentiated housing price thresholds that reflect reality," the person wrote, "and instead of a cliff structure that completely excludes anyone who exceeds the limit by even a small amount, introduce a gradual phase-out or other remedies."

These voices reflect a growing frustration: rising home prices combined with tightening loan limits are creating a double barrier for genuine homebuyers.

According to KB Real Estate's "July National Housing Price Trends" report released Monday, the average sale price of Seoul apartments this month — based on data as of the 13th — stood at 1.59 billion won, putting it on the verge of breaking through the 1.6 billion won mark. That is nearly 134 million won above the average sale price in October last year (1.46 billion won), the month the government set the 600 million won threshold for mortgage loans under its Oct. 15 measures. The average jeonse price for Seoul apartments also crossed the 700 million won mark for the first time this month, reaching 704.58 million won, and continues to climb.

Against this backdrop, the number of apartments eligible for policy loans is shrinking by the day. The price ceiling for policy-backed loans stands at 500 million won for the Didimdol loan (600 million won for newlyweds or families with two children; 900 million won for newborn-benefit loans) and 600 million won for the Bogeumjari loan. For a Seoul resident without children who needs to live in the city, policy loan-eligible apartments are effectively limited to micro-units or properties on the city's outskirts.

The homeownership rate among young people and newlyweds has fallen sharply as a result. According to the Ministry of Statistics, the homeownership rate among those aged 39 and under fell to 27.7 percent last year — dropping below 30 percent for the first time since the current age-group classification system was introduced in 2017. The gap in homeownership rates between those aged 39 and under and those in their 50s and 60s reached 35.8 percentage points and 40.8 percentage points, respectively — the widest wealth divide between younger and older generations on record over the same period.

Despite the mounting pressure, the policy loans most commonly used by young adults and newlyweds have seen their limits and disbursements cut, deepening the financing crunch.

According to the Korea Housing and Urban Guarantee Corporation, after the government reduced the Didimdol loan ceiling by 50 million to 100 million won under its June 27 real estate measures, total Didimdol loan disbursements from July last year through May this year came to 15.54 trillion won (including newborn-benefit home purchase loans) — down 9.29 trillion won from 24.83 trillion won over the same period a year earlier (July 2024 to May 2025). The Buitimdok loan for jeonse and monthly rent, whose ceiling was cut by up to 60 million won, also fell from 18.31 trillion won to 8.73 trillion won over the same period — a decline of more than 9 trillion won.

Adding to the anxiety, a recent tightening of household loan regulations has raised fears that policy loans could be blocked as well. A second-year newlywed identified only as A said she had planned to purchase a 500 million won-range apartment in a non-regulated area of Gyeonggi Province for the first time, using only the Didimdol and Bogeumjari loans, but was told by her bank that the loan might not be disbursed on the settlement date due to the bank's own volume management cap. "Please separate those of us who just want one home to live in from the banks' household loan volume management targets, so we can have peace of mind," she said.

Calls from genuine homebuyers for regulatory relief are expected to grow louder at Monday's second forum. At the first forum on July 23, President Lee directed a policy review, saying support should be delivered "in a pinpoint manner for young people, newlyweds, first-time buyers and low-income residents." Financial authorities are now examining a range of measures for real-demand mortgage borrowers, including easing the debt service ratio (DSR) standard and expanding both the supply volume and loan ceilings for policy-backed loans.

However, financial authorities face significant obstacles to broad deregulation. Even within the greater Seoul area, housing prices vary widely between Seoul, Gyeonggi Province and Incheon, and easing financing conditions could funnel demand into specific price brackets in certain areas, creating unintended distortions.

Ham Yeong-jin, head of Woori Bank's Real Estate Research Lab, said that because policy loan recipients are not limited to Seoul, there are limits to raising the price threshold across the board based on Seoul alone. "There is a need to maintain a wide supply buffer so that sudden loan shutdowns do not cause confusion for the diverse range of real-demand borrowers — including first-time buyers, large families and jeonse fraud victims," he said.