SEOUL- South Korea announced a fresh set of property regulations, including tighter mortgage rules, aimed at curbing red-hot home prices.
The proposed rules include banning mortgage lending on properties valued over 1.5 billion won ($1.27 million), and lowering the maximum amount of mortgage lending on those valued at 900 million won or higher but less than 1.5 billion won, the government said in a statement.
The loan-to-value ratios will be lowered to as low as 32 percent from the current 40 percent for those valued between 900 million won and 1.5 billion won, and are expected to be effective as of Dec. 23, according to the statement. The mortgage lending ban on high-priced homes will be effective as of tomorrow.
“Driven more by speculative investors seeking unreasonably high gains, there are needs to prevent property market disturbance and to ensure stable supply and demand of properties,” the nation’s finance minister Hong Nam-ki said in a news conference in Seoul.
Fast growth in property prices has frequently persuaded the central bank to raise interest rates or keep them unchanged when it could lower them.
Monday’s measures come as analysts have predicted the Bank of Korea would pause for a while and watch the property market situation before deciding whether to deliver a third rate cut in the current easing cycle. The Bank of Korea already cut the key interest rate twice in July and October this year. – Reuters