Korea's mortgage demand did not shrink under the caps. It moved to the insurers.

The five major non-life insurers' mortgage balance stood at 18.1776 trillion won at the end of July, up 77.4 billion won on the month and the largest increase of the year ^[1][2]. It was the fourth consecutive monthly rise since April, and it came while banks were tightening household lending limits, with demand concentrating on insurer mortgages and policy loans instead ^[3][4].

The arbitrage is written into the rulebook rather than smuggled around it. Insurer mortgages are subject to a debt service ratio cap of 50 percent, against 40 percent at banks, which allows a larger loan on the same terms ^[5]. On identical income that permits a quarter more annual debt service ^[6]. The briefing characterises the borrowers as owner-occupier buyers, not investors ^[7].

Policy loans are the cleaner illustration of where a partial perimeter sends money. That balance reached 14.7581 trillion won at the end of July, up 79 billion won in a month, the largest monthly increase of the year ^[8]. Policy loans can be drawn within a policy's surrender value with no separate income verification or credit screening, and are exempt from DSR rules altogether, which the report describes as making them a channel for quick cash ^[9]. Together the two insurer channels held 32.9357 trillion won and added 156.4 billion won in the month ^[10][11].

Keep the scale honest. The 77.4 billion won increase is 0.43 percent of the July stock, which compounds to roughly 5.2 percent if sustained for twelve months ^[12][13]. That is a leak, not a boom. What makes it worth reading is the direction and the persistence: four months in a row, accelerating into the month the banks squeezed hardest ^[4][2]. The source does not quantify any offsetting fall in bank mortgage demand, so the relocation is an inference from where the flow is landing, per the briefing's own account of borrowers concentrating on insurer products ^[3].

The price of money is not helping. The report says the Bank of Korea raised its base rate to 2.75 percent last month, with a back-to-back hike floated for the Monetary Policy Board meeting on the 27th ^[14]. On the sovereign side, the actual average funding rate from January to July ran at 3.65 percent against the 3.0 percent assumed when the budget was drawn, and July's funding rate reached 4.07 percent ^[15]. That is an overshoot of 0.65 percentage points on the year to date and 1.07 points in July alone ^[16]. Term money is repricing upward while borrowers are being pushed toward the channels with the loosest income tests.

Nor is the banking system itself priced uniformly. Household deposit-lending spreads at the five major banks in June ranged from 1.57 percentage points at Shinhan to 1.13 at Hana ^[17]. The three internet-only banks averaged 2.22 points against a 1.298-point average for the five majors, a gap of 0.92 points ^[18][19].

Watch three things. Whether the insurer mortgage series posts a fifth and sixth monthly rise, which would turn a leak into a channel. Whether policy loan growth keeps outpacing it, since a DSR-exempt cash line growing faster than a secured mortgage book is a household stress reading, not a housing one ^[9]. And whether the 50 percent insurer DSR survives contact with the numbers ^[5].