The government will tighten regulations regarding mortgage loans in government-designated speculative areas as part of efforts to calm jitters in the real estate market. 

Finance Minister Hong Nam-ki and related officials reached the decision during a meeting on Wednesday.  

The latest move focuses on discouraging so-called gap investments, a major mechanism of property speculation through which investors buy one or more residences with jeonse loans plus jeonse deposits paid by prospective tenants. Jeonse refers to a lump-sum housing deposit.  

With the change, tenant obligations to move in will become stricter in homes purchased within a government-designated speculative area. Currently, jeonse loan borrowers who purchase a residence for over 900 million won are obligated to move into that residence within one year of the purchase.  

The government will also tighten the limit of jeonse loans that can be taken out by people intent on buying a residence in speculative areas and expand such areas that will be subject to regulations.  

The Loan to Value ratio(LTV) for homes valued under 900 million won in the speculative areas will be restricted to 50 percent. The LTV for homes valued over 900 million won in such zones will be restricted to 30 percent.