Starting next month, the government will enforce stricter regulations on housing mortgage loans in the capital region compared to other regions, in an apparent response to rising household loans amid the overheated housing market.

At a meeting with the heads of banks, Financial Services Commission(FSC) Chairman Kim Byoung-hwan discussed the government's planned corrective measures, stressing the need to proactively manage the household debt.

While proceeding with a planned enforcement of more stringent loan regulations from September, the government intends to further tighten such rules for banks' housing mortgage loans in Seoul and the surrounding region.

The debt service ratio (DSR), which limits aggregate lending based on a borrower's payment of principal and interest relative to annual income, will be more strictly applied in the capital area.

Starting September 1, the FSC will implement the second-stage DSR on mortgages, with an interest rate reflecting a potential future rate hike, increasing from the current zero-point-38 to one-point-two percentage points. 

This change means that a borrower in the capital area with an annual income of 50 million won, or around 37-thousand U.S. dollars, would see the limit on a 30-year loan with an interest of four-point-five percent decrease by 42 million won, from 315 million won.