South Korea will tighten its regulations on mortgage loans in an effort to stabilize South Korea's housing market. 

The government announced on Wednesday that it will begin imposing lending limits for homes in the capital region and other regulated areas based on price tier.

The cap for homes priced at one-point-five billion won, roughly one million U.S. dollars, or less will remain 600 million won, while the limit for homes priced between one-point-five billion won and two-and-a-half billion won will drop to 400 million won. Loans for buyers of homes that cost more than two-point-five billion won will be capped at 200 million won.

The stress rate, a surcharge imposed to test repayment capacity, for mortgage loans in the capital region and other regulated zones will rise from one-point-five percent to three percent. 

In addition, the government hinted at the possibility of raising real estate-related taxes to steer capital toward productive sectors.