Total “jeonse” rent loans supplied by commercial banks grew around 2 trillion won ($1.62 billion) for the second consecutive month, as the number of house hunters looking for two-year leases instead of purchases increased, industry data showed Tuesday.
The jeonse loan balance of the country’s five major commercial banks -- KB Kookmin, Shinhan, Woori, Hana and Nonghyup -- came to 86.25 trillion won at the end of March, up 2.28 trillion won from a month before. The figure at end-February had gained nearly 2 trillion from the previous month.
Jeonse is a home rental system unique to South Korea, whereby tenants pay a lump sum deposit instead of monthly fees, and landlords return the deposit once the lease expires.
The surge in jeonse rentals came after the government tightened restrictions on mortgage loans to curb an overheated real estate market, lowering demand for home purchases.
Earlier in January, the government said it would block lenders owning a house with a market value of over 900 million won from receiving loan guarantees from private guarantors like Seoul Guarantee Insurance.
“Mortgage regulations coupled with signs of falling house prices in the wake of the coronavirus pandemic have led potential buyers to choose jeonse homes instead,” a bank official said.
By Choi Jae-hee (firstname.lastname@example.org