From 23 trillion won in 2012 to 180 trillion won in 2021
Ratio of households with jeonse loans 5.6→12.2%
Easier lending and higher jeonse prices
Stimulate demand for housing purchase and investment
“When the sales/jeonse ratio exceeds a certain level,
“Necessary system improvement such as limit on jeonse loan”
photo = Yonhap News
Although the Jeonse loan has played an important role in stabilizing the housing of the common people, it has been pointed out that the system needs to be overhauled as it has had a significant impact on the rise of the Jeonse price as well as the real estate price.
According to the report ‘Checking Market Changes Due to Increase in Jeonse Loans’ released on the 10th by the Management Research Institute of KB Financial Group, the balance of the Jeonse loan balance, which stood at 23 trillion won in 2012, has risen sharply since 2016, exceeding 100 trillion won in 2019 and ending at the end of last year. increased to 180 trillion won.
The support for the Jeonse loan, introduced in 2008, has been expanded, with the SGI Seoul Guarantee loan limit raised to 300 million won and 500 million won in 2015, respectively, under the Park Geun-hye administration in 2013. Currently, you can get a loan for Jeonse funds up to 80% of the rental deposit from public guarantee institutions. As a result, the proportion of households that took out loans to finance Jeonse rose from 5.6% in 2012 to 12.2% at the end of last year.
As such, the research institute analyzed that although it became easier to obtain a Jeonse loan, the liquidity increased and contributed to the increase in the Jeonse price. Last year, the annual housing jeonse price rose 9.4%, the highest rate since 2011. In particular, the increase in the metropolitan area was greater, around 20% in the past two years.
The median jeonse price rose from 140 million won (160 million won for an apartment) at the end of 2013 to 260 million won (〃 310 million won) at the end of last year. In the case of Seoul, the increase was remarkable from 230 million won (〃 260 million won) to 470 million won (〃 610 million won) during the same period. Although the upward trend has slowed since the fourth quarter of last year, it is still at a higher level than in the past.
It has also been shown to have a significant impact on the rise in house sales prices.
The report said, “Before 2018, when there were no regulations on multi-family housing and high-priced housing, the Jeonse loan was used as a fund for housing purchase and stimulated the purchase demand,” the report said. In line with the demand for investment that utilizes the asset as leverage, it acted as a factor in the rise of housing prices,” he explained. Changes in the form of real estate investment were also remarkable, such as gap investment, in which homeowners live and invest in jeonse, and an increase in the proportion of investment from outsiders.
The institute suggested that policy changes are necessary, focusing on the situation in which Jeonse loan will increase or the rate of increase will slightly decline in the future. The overall direction is to expand the benefits to the housing-vulnerable class and to fit the market logic for those with median income or higher. Specifically, in order to prevent the loss of the Jeonse deposit due to a drop in housing prices, if the sale/jeonse ratio is above a certain level (70% or 80%), restricting the loan for Jeonse funds, inducing borrowers to repay the principal and interest, and It also proposed a plan to include loan-to-debt in the calculation of the total debt-to-income ratio (DSR).
photo = Yonhap News
The research institute also suggested improvement directions for areas where the lessee is still likely to withdraw the deposit if the lessor is not a housing rental company through the ‘Rental Deposit-Related Guarantee Rationalization Plan’ report. The report states, “In cases where the rental deposit ratio exceeds a certain percentage (70%) of the housing market price, or when the number of lessor’s houses exceeds a certain number (No. He said, “We should gradually unify the guarantee for the return of the Jeonse deposit to the guarantee for the rental deposit.”
Meanwhile, as commercial banks continue to compete to raise the limit and cut interest rates, the loan threshold has been lowered to the level before the regulation on the total amount of household loans. Hana Bank will raise the limit of Hana One Q Credit Loan from 150 million won to 220 million won starting from 5 pm on the 12th. Hana Bank recently lowered the additional interest rate for this product by 0.2 percentage points. From the 21st of last month, Woori Bank applied a special preferential rate of 0.2% point to new mortgage loans and jeonse loans. It offers a preferential interest rate of 0.1 percentage point.
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