South Korea Strengthens Housing Loan Standards with 3-Year Income Averaging on July 15

According to the Financial Services Commission, South Korea unveiled new household loan management measures on July 15 designed to moderate income fluctuations from performance bonuses. Borrowers receiving exceptional year-end bonuses—such as semiconductor workers who received hundreds of millions of won—will have their debt service ratio (DSR) calculated using a 3-year average income if bonuses exceed 20% of regular salary.

The regulator also increased capital requirements for lenders, raising the risk weight for mortgage loans from 15% to 20%, with additional capital buffers for high-risk categories including high-LTV properties and multi-home borrowers. The commission aims to curb speculative real estate demand and advance financial governance through stricter CEO oversight and enhanced institutional investor roles.