Seoul, Korea – Despite recent moves by major banks to loosen mortgage lending restrictions, the actual impact on borrowers remains limited, industry experts say. While banks have reopened the door to mortgage refinancing, stringent conditions, particularly the 30-year maturity cap imposed on most loans, are dampening borrowing enthusiasm.

NH Nonghyup Bank is set to resume in-person mortgage refinancing services from January 10th, marking a significant step back from the suspension that began in June 2022. Additionally, the bank will allow homebuyers with two or more properties in metropolitan areas to borrow up to 200 million won for living expenses.

Although KB Kookmin, Shinhan, and Woori banks have also resumed in-person mortgage refinancing, experts argue that these moves do little to alleviate the overall borrowing burden. While borrowers can technically refinance their mortgages, the 30-year maturity limit means that those who took out 40-year mortgages in 2022 will see their borrowing capacity reduced.

While borrowers who have not maxed out their debt service ratio (DSR) of 40% may have more flexibility, those who have reached the limit should proceed with caution. Currently, only Hana Bank offers 40-year mortgage refinancing through online channels, while some regional banks provide similar options.

High-interest rates, currently hovering around 5-6%, further deter borrowers from refinancing. For those who secured mortgages at 3% in early 2022, refinancing would be financially disadvantageous.

The only silver lining for homebuyers is the availability of 40-year mortgages for the remaining balance of group purchases. This provides some relief for those acquiring newly constructed homes. However, for the broader housing market, the 30-year maturity cap continues to pose a significant challenge.

Seoul's apartment transaction volume has been on a downward trend since peaking at over 9,000 units in July 2022. Despite banks easing lending restrictions in late 2022, the number of transactions has continued to decline.

"While banks are relaxing lending restrictions, the 30-year maturity cap on mortgages remains unchanged, making it difficult for homebuyers to refinance," said a banking industry official. "Borrowers should carefully consider all factors before refinancing, as they may end up with a shorter loan term and higher interest rates."

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