President Lee Jae-myung (이재명) suggested transitional measures may be needed to address disruptions to balance-payment financing for people with existing home contracts, as total household lending controls are tightened. Financial authorities also said they would consult with banks so that loans that can be handled normally are not blocked by banks’ own lending cutbacks.

Lee was asked at a “National Public Debate on Real Estate Policy” held on July 23 at the KBS annex building in Yeouido, Seoul, about a participant who said he bought a newly built apartment 2 years ago for owner-occupation but can no longer obtain a balance-payment loan because loan limits have recently been reduced.

Lee called it “a valid point” and stressed that “it can be absurd if someone made a financial plan under the existing system and then policy changes.” He said regulators should look at people on the boundary of regulation and minimise harm.

The issue has been raised as a loan “shutdown” spreads across the banking sector. Banks have been halting mortgage lending under the household loan management stance.

KB Kookmin Bank capped mortgage limits at a maximum of 300 million won nationwide regardless of regulated areas. Woori Bank cut branch-level handling limits for housing-related loans to 1 billion won per month from 3 billion won. IBK Industrial Bank of Korea also said the previous day it would stop offering new variable-rate mortgages indefinitely.

Financial Services Commission Chairman Lee Eok-won (이억원) said, “As we regulate total lending, individual banks tend to tighten loans further.” He added, “There are also parts where balance-payment loans can be handled as before, so we will consult with banks.”