Joo Jin-woo: "Regulation telling only cash-rich individuals to buy homes… harms low-income and genuine buyers"

Joo Jin-woo, a member of the National Assembly from the People Power Party, strongly criticized the government's announcement of stringent real estate loan regulations, stating, "To prevent greater chaos, suspend its implementation over the weekend and conduct a comprehensive review."

On the 29th, Joo mentioned on his social media, "The idea that we can control real estate prices through loan regulations is a replica of the Moon Jae-in government's approach," and pointed out that "the hasty implementation of sudden loan regulations led to great turmoil in the market."

In particular, he noted, "In the metropolitan area, the housing mortgage limit is set at 600 million won regardless of price, which means only cash-rich individuals can buy homes," and added, "There is also the issue of equity with Chinese individuals who are not subject to loan regulations. When foreigners speculate, home prices will eventually rise."

However, foreigners are subject to the same loan regulations as domestic individuals, including the Loan-To-Value (LTV) ratio and Debt-To-Income (DTI) ratio when applying for housing mortgages. If policies change, foreigners will also be subject to the updated regulations.

"Low-income earners, newlyweds, and the elderly all suffer"

Joo argued that the new regulations would impact first-time homebuyers, newlyweds, and the elderly across the board. He stated, "For first-time homebuyers, if existing homes are not sold, they are completely prohibited from receiving mortgages, which harms genuine buyers in the situation where homes cannot be sold at once."

He continued, "The LTV for first-time homebuyer mortgage loans is also lowered, and there’s a mandatory residency requirement within six months, making it difficult for newlyweds to purchase a home," adding, "Mortgages for living expenses are also limited to 100 million won, which threatens the livelihood of low-income earners and the elderly who only have one home."

"Unprepared regulations only lead to market chaos"

Joo sharply criticized the government's lack of preparation and communication. He pointed out, "Without giving time to prepare, unforeseen victims are emerging, and some banks have halted non-face-to-face loans due to canceled apartment sales applications, leaving the second financial sector, which is the lifeline for low-income individuals, in confusion."

He further remarked, "President Lee Jae-myung said he had communicated but had not received reports; is that an excuse or a joke? This is not a situation to evade responsibility. Does that mean the president has been disengaged from core policies?"

Joo emphasized, "In economics, timing and signals are equally important," and expressed concern, stating, "If the signal from the Lee Jae-myung government is to create liquidity by borrowing, it would become difficult to manage exchange rates, prices, and real estate values all at once." He warned, "If we do not closely monitor market liquidity and housing supply, we will ultimately repeat the failures of the Moon Jae-in government's real estate policies."

Image source: Reference materials for understanding the article / gettyimagesbank, Joo Jin-woo of the People Power Party / News1