South Korea’s policy housing loans plunge as house prices surge, boosting financial vulnerability

Government‑run “Didimdol” home‑purchase loans and “Buseong” rent‑to‑own loans fell by about 19 trillion won in a year after the June‑27 2024 real‑estate measures cut loan limits. At the same time, Seoul and surrounding Gyeonggi‑province apartment prices rose sharply, with many areas now exceeding the revised loan ceilings, limiting access for low‑income buyers.

The Bank of Korea’s mid‑year financial‑stability report flagged a record‑high financial‑vulnerability index of 46.0, the highest in three‑plus years. Leveraged exchange‑traded funds (ETF) assets reached a record 35.4 trillion won, and credit‑linked borrowing hit 39.4 trillion won. Household loan growth surged by 9.3 trillion won in May, while corporate loan delinquency hit 2.43%, above the long‑run average. Foreign investors withdrew roughly $80 billion from Korean equities, and the won slipped past 1,540 per dollar—the first breach since the 2009 crisis.