Apartment sale listing prices are posted at a real estate agency in Songpa District, Seoul, on June 30. / Reporter Seong Dong-hoon

"With the ban on jeonse loans, I can’t secure the remaining balance. If there’s no other option, I plan to sell the apartment at the original price once the resale restriction is lifted.”

— From an online community for a new apartment complex in Seongdong District, Seoul

On June 30, the first business day after the government’s announcement of tighter lending regulations, many posts began to appear on online communities for newly built apartment complexes in the Seoul metropolitan area. Homebuyers shared how the new loan rules had disrupted their financing plans. As non-face-to-face mortgage loan services were halted, some rushed to bank branches in person. Banks, in turn, scrambled to seek clarification from financial authorities.

Under the new household debt control measures announced by the Financial Services Commission (FSC) on June 28, which took immediate effect, the cap for mortgage loans on newly sold apartments in the Seoul metropolitan area is now set at 600 million won for complexes that release homeowner recruitment notices after that date. New apartments like Maple Xi in Seocho District and HAUTERRE Foret in Seongdong District, which had already posted their notices before the new rules, are exempt. However, other apartments like LE EL in Jamsil, Songpa District, which have not yet started sales, are subject to the new cap.

Regardless of the recruitment notice date, “conditional jeonse loans” are now banned across all newly built apartment complexes. This means homebuyers can no longer pay off the final balance using a deposit from a jeonse tenant. In practice, unless they find a tenant with no existing loans, a near-impossible task, they are stuck. Apartment complexes set to begin sales soon, such as Lacervo PRUGIO SUMMIT in Seongdong District (July), Imun IPARK XI in Dongdaemun District (November), and Jamsil RAEMIAN IPARK in Songpa District (December), are among those immediately affected.

A buyer of a new apartment in Dongdaemun District, identified as "Ms. A," posted online, “I need to find a tenant to cover the final payment, but now that jeonse loans are blocked, I’m in serious trouble. I chose to rent it out because I needed to live near my parents, who help with childcare, but now I’m being treated like a criminal.”

Traditionally, buyers either take out a mortgage before moving in or find a jeonse tenant to pay off the remaining balance. If they cannot come up with the funds, their hard-won “lottery-like” purchase could fall through.

Experts predict that these new rules will likely put downward pressure on both sale prices and original prices of new apartments in affected areas. However, analysts believe that the ripple effects seen in some new complexes are unlikely to have a significant impact on the broader housing market in the Seoul metropolitan area.

Confusion reigned on the first business day under the new rules. While banks were aware of the 600-million-won cap on mortgages in the capital area, they lacked detailed implementation guidelines. As a result, bank staff were often unable to provide clear answers to customers.

One commercial bank official said, “There’s no guidance on whether we should approve an 800-million-won jeonse deposit return loan while mortgage loans are capped at 600 million. Bank staff across the industry have sent multiple inquiries to the authorities and are awaiting responses.”

At a bank branch near Seoul City Hall, a man in his 30s, identified as "Mr. B", said, “I was looking to refinance my mortgage, but when I heard online loans were blocked, I rushed to the bank.”

On that day, the FSC released a reference document saying that the “contract date” would serve as the standard. The FSC clarified that both mortgage loans and jeonse loans would only be subject to the previous regulations if the purchase or rental contract was signed by June 27, before the new rules took effect.

In addition, financial authorities have launched on-site inspections to ensure proper loan screening across all financial institutions. The FSC is also closely monitoring for any "balloon effects” where blocked demand spills over into business loans or secondary financial institutions.