Lee: Jeonse loans fuel housing costs, time for adjustment

South Korean President Lee Jae-myung has pointed to Jeonse loans as a primary driver of soaring apartment prices and persistently high housing costs. He suggested that regulations on these loans need to be tightened, signaling a potential reduction in loan limits and guarantee ratios.

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Jeonse loans have become the main cause of skyrocketing apartment prices or maintaining high prices, so we must be cautious about expanding them.

"Jeonse loans have become the main cause of skyrocketing apartment prices or maintaining high prices, so we must be cautious about expanding them," Lee stated at a national forum on real estate policy. He added that there is a stance to "strictly limit not only additional loans but also existing ones."

The president argued that past excessive expansion of Jeonse loans and public guarantees, intended to stabilize housing for the middle class, has inadvertently pushed both Jeonse and sale prices upward. "We provided almost unlimited Jeonse loans to the middle class to make it easier to secure Jeonse, but when Jeonse becomes too easy, housing prices ultimately rise further," Lee explained. He noted that Jeonse prices constitute 60-70% of overall housing prices, with the Jeonse deposit serving as a significant factor.

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There is a stance to strictly limit not only additional loans but also existing ones.

While Lee indicated a need for stricter controls, he also proposed a policy of "pinhole-type selective support" for vulnerable groups. This approach aims to provide assistance specifically to those who genuinely need it, such as the homeless, young couples, and newlyweds, ensuring that policy changes do not disproportionately harm these segments of the population.

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We provided almost unlimited Jeonse loans to the middle class to make it easier to secure Jeonse, but when Jeonse becomes too easy, housing prices ultimately rise further.