Korea’s Bullet Loan Dominance: 88% of Loans Use Interest-Only Payments

March 22, 2026 Priya Shah – Business Editor Business

South Korean rental property owners are collectively holding 258.5 trillion won (approximately $195 billion USD) in outstanding loans from banks, according to data released by the Financial Supervisory Service (FSS) and analyzed by National Assembly member Kim Sang-hoon. The figures, current as of January 31, 2026, represent the first comprehensive accounting of lending to the sector by financial regulators.

While the total loan volume is substantial, the proportion secured by apartments – a key focus of government regulatory efforts – remains relatively minor, accounting for less than 2% of the overall portfolio. Approximately 5.2 trillion won ($3.9 billion USD) is tied to apartment collateral, with a further 13.1 trillion won ($9.8 billion USD) secured by other types of property.

A significant characteristic of these loans is their repayment structure. A substantial 88% of the total outstanding balance – 227.2 trillion won ($171.5 billion USD) – is structured as “maturity-at-a-glance” loans, requiring full principal repayment upon maturity. This poses a potential risk to landlords facing difficulties refinancing or selling properties when their loans come due, particularly as the government restricts loan extensions.

The remaining 12% of the rental property loan portfolio, amounting to 31.3 trillion won ($23.6 billion USD), utilizes an installment repayment plan, where both principal and interest are paid over the loan’s duration. Housing collateral accounts for 7% of the total rental property loan volume, or 18.2 trillion won ($13.7 billion USD).

The data comes as the financial authorities prepare to implement stricter regulations on lending to multi-property landlords. Previous measures, enacted in June and September of 2025, effectively blocked new loans to landlords in the Seoul metropolitan area and other regulated zones by setting loan-to-value (LTV) ratios to 0%. The government intends to apply similar stringent criteria to loan renewals, potentially forcing full repayment of existing debt.

According to the FSS data, approximately 12,000 apartments owned by landlords in the Seoul metropolitan area and other regulated regions are subject to maturity-at-a-glance loan terms. The financial authorities are currently finalizing the details of a broader household debt management plan targeting these landlords, with an announcement expected in the coming weeks.