South Korea\'s financial sector is raising lending hurdles ahead of a possible government property package as early as next month. Banks are tightening self-imposed rules, including reducing credit loan limits and strengthening management of overdraft facilities, even as decisions on mortgage and jeonse loan curbs remain undecided. Markets are watching possible tighter jeonse loan guarantees and renewed focus on second-tier lenders. Internet-only banks are also cutting limits as demand shifts.

South Korean financial authorities are moving to tighten practices that allow multi-homeowners to extend loans, and are considering expanding limits to non-resident single-homeowners. Regulators are compiling detailed mortgage statistics to design rules, including applying a zero LTV standard to extensions. President Lee Jae-myung signalled pressure on investment and speculative single-homeownership and high-priced homes. Authorities may also tighten jeonse loan limits, raise banks’ mortgage risk weights and review property and capital gains tax thresholds.