Severe Mortgage Restrictions Spark Controversy in South Korea

On June 27, the Financial Services Commission of South Korea announced a stringent measure prohibiting mortgage loans exceeding 600 million KRW (approximately $500,000) as part of its household debt management strategy. This decision has drawn sharp criticism from the People Power Party (국민의힘), which argues that it exacerbates wealth inequality by allowing only cash-rich individuals to purchase homes.

Spokesperson Park Min-young (박민영) stated on June 28 that the new regulations are unprecedented, claiming they are more severe than the 28 real estate policies implemented during the previous Moon Jae-in administration. With the average home price in Seoul surpassing 1.3 billion KRW (around $1 million), Park emphasized that only those with at least 700 million KRW in cash would realistically be able to afford a home. He pointed out that accumulating such an amount would take over 20 years of saving for the average worker in their 20s and 30s, effectively discouraging home ownership through earned income.

Park further criticized the abrupt announcement of the loan restrictions, which came without any grace period, causing significant turmoil in the financial and real estate markets just before the weekend. He also highlighted the irony of the presidential office distancing itself from the policy, calling it a farce where the administration shifts blame for its own decisions. He asserted that all failures of governance fall squarely on President Lee Jae-myung (이재명) and the Democratic Party (민주당), urging that such disarray should not happen again.

On the same day, lawmaker Ahn Cheol-soo (안철수) expressed disbelief on Facebook, questioning whether President Lee and the Financial Services Commission were operating independently. He criticized the administration for not taking responsibility for the policy confusion and urged them to engage actively in governance rather than merely observing.

Lawmaker Kim Gi-hyeon (김기현) also took to social media, stating that the poorly planned housing policy is causing confusion among citizens and is likely to benefit wealthy individuals at the expense of young people and the working class. He noted that newlywed couples and young adults hoping to buy homes are now in a state of shock due to the announcement, fearing a repeat of the previous administration's failures that led to skyrocketing housing prices.

Additionally, lawmaker Joo Jin-woo (주진우) criticized the rushed implementation of the loan restrictions, arguing that it favors cash-rich buyers while disadvantaging those who need to sell their homes to qualify for loans. He called for a suspension of the policy to prevent further chaos and a comprehensive review of the measures.

The announcement has raised concerns about the potential impact on the housing market, with many fearing that it will lead to a further increase in property prices and deepen the divide between the wealthy and the average citizen.