Insurers Halt Lending as Mortgage Curbs Spread, Homeownership Gets Harder

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an 'AI-based customized news recommendation and summary service' developed with support from the Korea Press Foundation. It selects and provides six customized news items for each reader type.

1. Drastic Measures Against Surging Household Loans... Concerns Over "Direct Hit to End-Users and Those in Their 20s and 30s"

- Key Summary: KB Kookmin Bank implemented a measure lowering its nationwide mortgage loan limit to 300 million won, citing the burden of managing total household loan volumes. The bank reduced mortgage loans by 1.5476 trillion won through May, exceeding its reduction target of 1.5429 trillion won, but explained that loan demand rebounded in June, making it difficult to meet its annual management target. Shinhan Bank and Hana Bank are reviewing similar limit reductions, while insurers including Samsung Life Insurance, Samsung Fire & Marine Insurance, Hanwha Life Insurance and NH NongHyup Life Insurance have successively suspended mortgage and credit loans. According to the Korea Real Estate Board, nationwide apartment prices rose 0.09% week-on-week in the fifth week of June, with prices in the Seoul metropolitan area up 0.20%, raising concerns that lending regulations will burden end-users and homebuyers in their 20s and 30s seeking to purchase homes.

2. Land Ownership Requirement to Drop From 95% to 80%, But Only One Association Benefits

- Key Summary: The government is pushing to lower the land ownership requirement for regional housing association project approval from the current 95% to 80%. According to the Seoul Metropolitan Government, the average land acquisition rate among the 105 of Seoul's 112 regional housing associations with confirmed figures stood at just 20.1% as of the end of March. Only one project, the Jeongneung Station association in Seongbuk-gu, has secured more than 80% and is expected to benefit from the eased requirement. With 82 projects—more than 70% of the total—still at the member recruitment reporting stage, critics point out that easing the requirement alone will not be enough to normalize long-stalled projects. Industry voices call for combining public support with improved project feasibility, following the example of Germany's Baugruppen model.

3. Heerim to Design Pyeongchon Reconstruction

- Key Summary: Heerim Architects & Planners was selected as the designer for the A-17 special redevelopment zone integrated reconstruction project in Pyeongchon New Town. This is the first designer selection in a first-generation new town reconstruction project since the Special Act on Aged Planned Cities took effect. The four complexes—Kkummaeul Kumho, Hanshin, Life and Hyundai—currently comprising 1,750 households will be transformed into 2,875 households with buildings up to 49 stories through reconstruction. Heerim, in a consortium with Samha Architecture, won 78.6% of owners' votes. The result is expected to serve as a benchmark for designer selection competition in other leading districts, including Bundang, Ilsan, Sanbon and Jungdong.

4. LH President Lee Sung-hoon Visits Seoripul District: "Cut Construction Start by More Than a Year"

- Key Summary: Lee Sung-hoon, president of the Korea Land & Housing Corporation (LH), visited the Seoripul public housing district in Seoul as his first move after taking office and ordered that the start of housing construction be moved up by more than a year from the original plan. The Seoripul district is a key housing supply site in the Seoul area, with up to 20,000 households planned across District 1 (18,000 households), designated in February, and District 2 (2,000 households), designated in June. LH plans to apply for the district plan this month, aiming for approval in the first half of next year, compensation in the second half, and a construction start in 2028. The corporation also plans to expand public rental housing for young people in prime locations such as areas near subway stations and newly introduce mid-sized units for newlyweds and families with newborns.

5. Jeonse Fraud Victims Near 40,000 Cases

- Key Summary: The Ministry of Land, Infrastructure and Transport held three plenary sessions of the Jeonse Fraud Victim Support Committee in June, recognizing 548 additional cases as victims and bringing the cumulative total of recognized victims to 39,669 cases. Jeonse is a Korean lease system requiring a large lump-sum deposit instead of monthly rent. The approval rate stood at 60.0% of the 66,142 cases processed in total. LH's purchases of jeonse fraud-affected homes reached 9,707 units in the first half, a rapid acceleration compared with just 90 units in all of 2024. The ministry and LH also plan to implement a system this month to advance a portion of auction proceeds to victims of jointly collateralized properties.

6. Koramco Asset Trust Holds Top Credit Rating for Ninth Consecutive Year

- Key Summary: Koramco Asset Trust maintained the highest credit rating of 'A' (stable outlook) from NICE Investors Service and Korea Investors Service for the ninth consecutive year, even amid a credit deterioration phase in the domestic real estate trust industry. Its REIT-focused business portfolio and conservative trust business operations were cited as the key grounds for maintaining the rating. As of the end of June, its REIT assets under management stood at approximately 17.7 trillion won, keeping its position as the No. 1 asset management company (AMC) in the private REIT sector for 25 consecutive years, while its debt ratio improved from 41.7% at the end of 2024 to 27.9% in the first quarter of this year. Last month, the company was selected as the preferred bidder to manage real estate blind funds for the Government Employees Pension Service and Korea Post, securing approximately 1 trillion won in additional investment capital.