“Outskirts of Seoul, which were less regulated, LTVs below 900 million won are high… more vulnerable to falling house prices”

Input 2021.04.04 14:40 | Revision 2021.04.04 15:37

An analysis suggests that houses outside of Seoul and houses under 900 million won will be more vulnerable to the risk of falling house prices. They analyzed that the mortgage loan ratio (LTV) was high because they were less regulated in the past several government measures, and the risk factor was also greater.

Song Min-gyu, a senior research fellow at the Korea Financial Research Institute, said in the report on’Key Monitoring Matters for Household Debt Risk Management’ on the 4th.

Although house prices have continued to rise over the past three years, he expects that house prices may decline in the future due to the burden of holding taxes and strengthening loan regulations. Research Fellow Song emphasized, “To detect the risk of falling house prices early, it is necessary to subdivide supervision according to the characteristics of borrowers and collateral as well as the possibility of insolvent by financial company.

In particular, he predicted, “Houses in the outskirts of Seoul and those with less than 900 million won will be relatively more vulnerable to falling house prices.”

At the same time, “It is estimated that the mortgage loan ratio (LTV) in the outskirts of Seoul, where the intensity of lending regulation was relatively weak when the housing price surged last year, was relatively high. He explained.

Research Fellow Song also emphasized, “In the period of rising house prices, loan regulations continued to be strengthened, and to bypass this, purchases using jeonse and private borrowing would have been actively utilized.” .

He said, “The interest burden of household debt depends on the COFIX (financing cost index), which is used as a loan rate standard, which is closely related to the market interest rate of 0 to 3-year bonds.” You have to pay attention,” he said.

In addition, he added, “Changes in household income and stock prices are also indicators to be observed in terms of risk management.”