FSC chief warns easing loans would push housing further out of reach

FSC Chairman Lee Eok-won said Wednesday that loosening lending restrictions would set off a damaging cycle in the housing market. "When loans are freed up, it macroeconomically stimulates real estate prices, destabilizes the market again, and keeps producing a structure where the housing ladder grows ever more distant," he said, defending the government's policy stance of decoupling real estate from finance.

Lee made the remarks at a plenary session of the National Assembly's Financial Affairs Committee, responding to a question from People Power Party lawmaker Jo Jeong-hun, who asked whether it was right to block younger generations from growing their assets through housing — something older generations had done for decades. "When finance is used in a way that stimulates real estate, many adverse effects follow," Lee said.

Jo pressed Lee on his personal record, citing a mortgage Lee took out in 2013. "You said decoupling real estate from finance is your conviction — when did that conviction begin? Was it a conviction back in 2013 as well? Are people who buy homes using jeonse deposits and loans bad people?" Jo said.

According to Jo, Lee purchased a unit in Gaepodong Jugong Complex 1 in Gangnam-gu, Seoul, for 850 million won ($580,000) in 2013 while on assignment at the South Korean mission to the UN in Geneva, taking out a 350 million won mortgage backed by a jeonse deposit. Jo also noted that Lee was 46 at the time — an age that would not qualify as "youth" under current standards.

In response, Lee said, "I never called them bad people," adding that "our generation needs to take greater responsibility and work to solve this problem."

He said finance needed to flow toward more productive sectors so that companies could grow, jobs could be created and incomes could rise — "that is what truly helps young people" — and added that "genuine buyers in need should be supported."