“2 Billion Won Apartment, 600 Million Won Loan Provided”: Will ‘Seller Financing’ Spread Amid Tight Mortgage Regulations in Korea?

1. Summary

Amid the government’s tightened loan regulations and pressure from tax reforms, a so-called “landlord loan” practice, where sellers directly provide loans to buyers for high-priced properties, is emerging.
This is a technique known as “seller financing,” used when the interests of buyers, who struggle to secure the balance due to significantly reduced loan limits following regulations implemented in June last year, align with those of sellers looking to dispose of their homes quickly. Seller financing is a method where the seller secures the unpaid balance or provides financial support when it is difficult to raise funds solely through loans from financial institutions. It is used on a limited basis in the high-priced housing market.

2. How is related to the sub

(1) Housing crisis and mortgage regulation: Amidst tightening mortgage regulaton, new real estate transaction practice of “seller financing” has emerged. President Lee Jae-myung engaged in this practice to quickly sell his home, drawing criticism from the mainstream media of bypassing his own regulation. He has sold his home to a PR campaign to convince the public that stock market is more profitable than real estate speculation.

3. My opinion

Housing crisis in Korea is being supercharged by capital overflow from AI boom and the government inability contain excess capital. The government has been relaxing regulations to build new homes but capital overflow came earlier than housing supply.