Seoul Rental Market Braces for Impact as Bank Caps Mortgages at $300 Million Won

Seoul's rental market faces heightened instability following stricter mortgage regulations imposed by KB Kookmin Bank. The bank has capped the maximum mortgage loan at 300 million won, a significant reduction that will increase the financial burden on prospective homebuyers.

Previously, a buyer could purchase a 1.5 billion won home with a 900 million won down payment and a 600 million won loan. Now, with the new cap, the same home would require a 1.2 billion won down payment, effectively barring many from entering the market. This tightening is anticipated to push more potential buyers, who were planning to purchase homes, to remain in the rental market, further driving up demand and prices for apartments.

Financial authorities had previously differentiated loan limits based on housing prices, allowing up to 600 million won for homes under 1.5 billion won. However, KB Kookmin's internal cap overrides this, signaling a broader trend as other commercial banks are expected to follow suit with similar lending restrictions. The move reflects a broader effort to manage household debt and cool the housing market, but it may inadvertently exacerbate the rental crisis.