As the limit on policy loans, such as the stepping stone loan, has decreased by 20%, the plans of those without housing to secure dwellings using this option have been disrupted. While the reduction in the limit for policy loans was a decision aimed at stabilizing the housing market and managing household debt, actual demanders intending to secure mid- to low-priced dwellings were also affected.
According to the government on the 2nd, the maximum limit for the stepping stone loan was uniformly reduced by 20% starting from the 28th of last month. The stepping stone loan is a policy loan provided at low interest rates for those without housing. Those without housing with an annual income of 60 million won (85 million won for newlyweds) can borrow money to purchase dwellings costing up to 500 million won (600 million won for newlyweds).
The maximum limit for the general stepping stone loan will be reduced from the existing 250 million won to 200 million won across all regions. The limit for first-time stepping stone loans will decrease from 300 million won to 240 million won, and the newborn special loan will reduce from 500 million won to 400 million won, while the newlywed limit has been cut from 400 million won to 320 million won. Notably, the government also withdrew its policy to expand the eligibility for the newborn special loan to those with an annual income of up to 250 million won.
This measure was decided upon due to concerns that policy loans were driving up housing prices and stimulating household debt. The rapid depletion of the housing & urban fund, as the scale of policy loans surged, also influenced this decision by the government.
However, as this measure was implemented without a grace period, actual demanders, including young people and newlyweds who were planning to move, have found themselves needing to revise their funding plans. They are contemplating ways to secure additional funds, either by exploring the other policy loan, the housing stability loan, which is exempt from loan regulations, or through credit loans.
A 30-year-old individual, A, who was planning to move in Incheon, said, "I was planning to secure a home instead of continuing to rent as my child grows, but the loan limit has decreased." They added, "I was hoping to borrow 250 million won through the stepping stone loan, but now I am looking to see if I can arrange 50 million won through a credit loan. It would be nice if housing prices fall by the amount of the reduced loan limit. "
Another 30-year-old individual, B, noted, "I thought I would meet the first-time conditions, so I was considering contracts while looking for houses in the outskirts of Seoul until last week, but suddenly my plans were disrupted due to the reduction in the loan limit."
In particular, this reduction in the policy loan limit is expected to impact not just the metropolitan area but also regions across the country. While only 15% of apartments in Seoul cost less than 600 million won, the proportion of apartments eligible for the stepping stone loan increases as you move to the provinces.
A representative from a certified brokerage in Sejong City said, "There are many young generations in Sejong City, so the proportion of transactions using the stepping stone loan, such as the newborn special loan, has been high. However, with the recent decrease in the loan limit, the buying sentiment seems likely to dampen for the time being."
A real estate expert remarked, "It was probably not the government's intention to affect the local real estate market by reducing the policy loan limits. However, since they are required to reduce overall household loans, the inclusion of policy loans in the regulations may affect actual demanders in the provinces who were hoping to utilize the stepping stone loan."