Financial authorities appear to be moving toward exempting balance-payment loans from household lending caps, raising hopes that the housing pre-sale market will get some breathing room. The market, however, is calling for relocation and interim-payment loans to be excluded from the caps as well, arguing that consistent housing supply is impossible without broader relief.
Gov't in cross-ministry talks on 'group loans'; 14,000 units set for August move-in
The government is in discussions, led by the Financial Services Commission and involving the Ministry of Land, Infrastructure and Transport and other related ministries, on exempting "group loans" — a category that includes balance-payment, interim-payment and relocation loans — from household lending volume management, according to government sources Wednesday. The talks follow a meeting Tuesday between the FSC and commercial banks to begin working out a plan to exempt balance-payment loans from the caps.
"Managing household loans is important, but the effects on housing supply and the predictability for end-users also need to be considered comprehensively," a Ministry of Land, Infrastructure and Transport official said. "The FSC is leading ongoing consultations with related ministries."
![President Lee Jae Myung speaks at a national public forum on real estate policy held at KBS in Yeouido, Seoul, on July 23. [Yonhap]](https://wimg.heraldcorp.com/news/cms/2026/07/29/news-p.v1.20260723.e66a4cba82b2485094d91ab9dcd3c602_P1.jpg)
The broad inter-agency discussions were prompted in part by President Lee Jae Myung's criticism that pre-arranged group loans were being restricted by after-the-fact regulation. At a national public forum on real estate policy he chaired July 23, a woman who identified herself as a prospective resident of the Paellusid complex at Suwon's Maegyo Station raised the issue. She said she had purchased the unit two years ago for her own residence but was now unable to secure a balance-payment loan because of per-bank lending limits imposed under the household loan volume controls.
Lee said the situation amounted to an absurdity. "People made plans based on the rules that existed at the time — if the policy changes and this is what happens, it can lead to truly outrageous outcomes," he said. "It seems like a real problem." FSC Chairman Lee Eok-won, speaking Monday at a second national forum chaired by Prime Minister Han Seong-sook, said the commission would "work quickly with the banking sector to find a realistic solution."
With the FSC now moving to open an exit for the immediately blocked balance-payment loans, the approximately 14,342 apartment units scheduled for move-in nationwide this month are now expected to bedelivered on schedule. In the greater Seoul area, 3,540 units in Seoul and 5,384 units in Gyeonggi Province — 8,924 in total — are set to be occupied. Next year, the number of units scheduled for move-in is expected to reach 77,761, with an additional 32,617 new homes slated for supply in 2028.
What about relocation and interim loans? Experts warn caps will undercut supply
The market, however, is pressing for more. Industry voices say that exempting only balance-payment loans is not enough — relocation and interim-payment loans must also be freed from the caps before housing supply in the greater Seoul area can normalize. The real estate policy forum website has received about 86 policy proposals specifically addressing relocation and interim-payment loans.
A Seoul resident surnamed Kim, who lives on the city's outskirts, said that in outer Seoul and Gyeonggi Province, a 40 percent loan-to-value ratio cap means relocation loans are effectively unavailable, making it nearly impossible for association members to move out of redevelopment zones. "The 600 million won ($409,000) ceiling is just the maximum — in outlying areas, where existing asset valuations are already low, people can only get 100 million to 200 million won at most," Kim said. The dominant call from residents was to ease the loan-to-value ratio regulation modestly, even while keeping the 600 million won ceiling in place.
Another resident, surnamed Jang, who described himself as an ordinary office worker, said that saving 1 million won a month, it would take more than four years to accumulate the 50 million won down payment — 10 percent — needed to sign a contract on a 500 million won home. "Even after signing, tightening regulations on interim-payment and balance-payment loans are increasingly disrupting financing plans," Jang said. "People are finding themselves having to abandon home purchases they had already planned."
Experts also say that relocation, interim-payment and balance-payment loans — which serve as bridging finance in redevelopment projects and the pre-sale market — must be available in a predictable way for housing supply measures to have any real effect.
Kim Je-gyeong, director of Toomi Real Estate Consulting, said at President Lee's real estate forum that relocation is a prerequisite for demolition and rapid ground-breaking in redevelopment and reconstruction projects. "If relocation loan problems arise for both owner-occupiers and multi-home owners, the relocation process effectively cannot proceed," Kim said, underscoring the role of relocation loans in housing supply.
Jung Jae-hun, an assistant professor in the Department of Urban Planning and Real Estate at Dankook University, said interim-payment and balance-payment loans are a critical housing ladder for people without homes who lack the cash reserves to buy in the greater Seoul apartment market. "Supply measures can only take effect if those loans flow smoothly," Jung said. "If they remain subject to aggregate lending caps, end-users have no way of knowing when or how their loans might be cut off, which drastically undermines their ability to plan."
hss@heraldcorp.com
