South Korea's four major lenders saw mortgage applications jump nearly 11 percent shortly after the government unveiled measures to cool the property market this week, sources said Thursday.
The finance ministry announced Monday it will start tightening credit early next month as part of efforts to counter signs of overheating real estate markets in Seoul and several other regions.
According to the sources, mortgage applications filed Tuesday with the four largest lenders in the country -- KB Kookmin, Shinhan, KEB Hana and Woori -- rose 10.6 percent from a week earlier.
On the day of the announcement, however, mortgage applications with the banks remained almost unchanged from a week ago.
The surge is seen as indicating that would-be homebuyers rushed to borrow money before the measures go into effect July 3.
(Yonhap)
Market watchers said major banks may see more mortgage applications this week, given the necessary period for paperwork and loan screening.
The local financial authorities said they will rein in such mortgage loans through window guidance since banks may capitalize on the mentality of would-be borrowers.
The measure comes as South Korea's household debt a record 1,359.7 trillion won ($1.19 trillion) at the end of March, sparking concerns it could lead to a financial meltdown.
Under the measures, the loan-to-value ratio in Seoul, Gyeonggi Province, some areas in Busan and the administrative capital of Sejong will be lowered to 60 percent from 70 percent. The debt-to-income ratio in the areas will be marked down to 50 percent from 60 percent.
That means homebuyers in the areas will be able to borrow up to 60 percent of their property value and 50 percent of their income for mortgage payments. (Yonhap)