SEOUL– South Korea will ease lending rules for first-time homebuyers and single-home owners next year as the once red-hot housing market appears to be entering a downturn amid rising interest rates, financial authorities said Thursday.

In recent years, the government has adopted stricter lending rules and other regulations to help stabilize the country’s real estate market.

In an emergency economic meeting presided over by President Yoon Suk-yeol, Financial Services Commission (FSC) Chairman Kim Joo-hyun announced the latest measures to help first-time homebuyers and single-home owners, in particular.

“There is a growing concern about a possible failure of the property market’s ‘soft landing’ amid rising mortgage rates. To reflect these changing market conditions, the government will allow first-time homebuyers and single-home owners (who want to dispose of their existing homes) to take up to a 50 percent mortgage loan for homes worth over 1.5 billion won (US$1.06 million) in speculative districts,” he said.

Currently, mortgage loans are not allowed for homes valued at more than 1.5 trillion won in speculative areas.

For multiple homeowners, however, the current 60 percent loan-to-value (LTV) ratio will remain in non-speculative areas, and zero percent LTV ratio will still apply in speculative areas, the FSC said in a statement.

Financial authorities will hold meetings with related agencies to come up with detailed plans with an aim to execute the eased lending rules early next year, the statement said.

Source: Yonhap News Agency