Name: Korea's new economic team to ease housing loan regulations
Uploaded: 2014-07-16T06:57:56.000Z
Duration: 2 min 4 s
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A new economic team working directly under President Park Geun-hye is set to launch this

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Wednesday. The team is tasked with boosting public spending

and getting Korea out of its low-growth trap. For more on how they hope to do that, our

Hwang Ji-hye reports. Korea's new economic team,... which will be

led by incoming finance minister Choi Kyung-hwan, has one goal -- to spur growth.

To achieve it,... the team is expected to first fiddle with the nation's real estate

market. Officials at the finance ministry say... a

set of economic policies for the second half of this year is expected to include measures...

like easing loan-to-value ratio limits for mortgage lending to 70 percent.

That means... home buyers would be able to borrow up to 140-thousand U.S. dollars when

buying a house worth 200-thousand dollars. The current loan-to-value ratio stands at

50 percent for those living in the nation's capital area,... which allows them to borrow

just 100-thousand dollars when purchasing the same house.

Home buyers who are short of cash... typically are forced to borrow money from non-banking

financial institutions... that charge them higher interest rates.

Economic policymakers expect people moving their loans from non-banking lenders to banks

to spend more,... which would also lead to pulling the country out of its sluggish domestic

demand trap. While many are concerned... that easing housing

loan regulations could lead to more household debt,... which already hovers around 980 billion

dollars,... the nation's real estate market is welcoming the government's expected move.

"Easing regulations won't really lead to more household debt because there aren't a lot

of speculative investments in the real estate market these days."

Economists still add... that the government should also set up countermeasures to address

the side-effects that could occur from easing housing loan regulations.