Gov't lifts restrictions on low-income household policy loans in response to backlash

[Anchor]

The government is strengthening loan regulations to curb the increase in household debt.

However, after placing restrictions on the Didimdol loan, a financial product for low-income households, the government faced strong backlash from actual users and have decided to temporarily suspend the restrictions.

Reporter Kim Hye-joo has the details.

[Report]

This woman, who had taken out a Didimdol loan to purchase a newlywed home, recently learned that her loan limit had been reduced by nearly 100 million won.

With a move scheduled for February next year, she now faces a significant financial gap.

[Didimdol Loan User/Loan Limit Reduced by About 100 Million Won: "100 million won is not money that just suddenly appears. I have no idea how to rearrange my financial plans...."]

The reason for this situation is that the government recently requested banks to limit the loan amounts for the Didimdol loan, which is a policy financial product.

First, they lowered the loan-to-value (LTV) ratio from 80% to 70% for first-time homebuyers, and the restrictions were applied without exception to the 'small lease deposit deduction', which excludes the amount protected for tenants when properties go to auction or public sale from the loan limit.

In Seoul, this deduction amount is 55 million won.

[Didimdol Loan User/Loan Limit Reduced by About 80 Million Won: "I can't get my deposit back, and I can't cancel this, and honestly, I feel like I want to die right now...."]

They need to find tens of millions of won from somewhere, but most of these users are already in tight financial situations.

The Didimdol loan is a policy financial product aimed at households with a combined annual income of less than 60 million won.

[Didimdol Loan User: "Since there are many low-income individuals, once they take out a mortgage, it consumes all of their DSR (Debt Service Ratio) limit. That's why we can't get any other loans, such as credit loans."]

[Kwon Dae-jung/Professor of Real Estate at Sogang University: "The increase in household debt is related to high-value loans in major areas of Seoul, such as Gangnam and surrounding areas, but people in other regions may suffer as a result...."]

As controversy grew over the sudden change in significant regulatory measures, the government notified banks today (Oct. 18th) to temporarily suspend the restrictions on Didimdol loans.

This is KBS News, Kim Hye-joo.