South Korea's financial regulator plans to impose tougher mortgage rules in designated cities as part of its efforts to curb speculative housing demand.
The Financial Services Commission said Aug. 2 it will tighten loan-to-value and debt-to-income ratios to 40% for home buyers in "bubble-prone areas" including Seoul and Busan. This lending ceiling will be applied regardless of housing type, and amount and maturity of mortgages.
However LTV and DTI ratios of 50% will be applied to first-home buyers, low-income households with annual earnings of less than 60 million won and low-price housing of less than 600 million won.
For those who own two or more homes, the regulator proposed to tighten the LTV ratio by a further 10 percentage points across the country. DTI ratios will be tightened by the same amount in the designated areas for multiple home owners.
As of Aug. 3, US$1 was equivalent to 1,127.50 South Korean won.