The financial regulator has eased the debt-to-income rule in its latest bid to revitalize the housing market. The step, announced on Friday, seeks to boost demand for homes by allowing young workers and older citizens to take out more loans when they purchase houses.

Currently, when a person takes out a mortgage, the maximum loan amount is determined by his debt-servicing ability. For a resident in Seoul, principal and interest payments on a mortgage should not exceed 50 percent of his present annual income.

The Financial Services Commission tweaked this rule for employees under 40 and senior citizens who own homes. For workers in their 20s and 30s, the regulator has allowed banks to calculate the DTI ratio taking into account their salary growth over the next 10 years.

According to the FSC, this rule change will allow employees in their 20s and 30s to borrow on average 40 million won and 36 million won more than now, respectively.

For older retirees, the new regulation recognizes their homes as a source of income, enabling them to obtain a mortgage based on the income computed from the value of their assets. Currently, such assets are not considered a source of income.

These measures clearly show the dilemma facing the financial regulator. To restart the housing market, demand for homes should be expanded. For this, it is necessary to raise the DTI ratios, which now stand at 40 to 60 percent depending on the region. But the FSC cannot take this option because it will accelerate household debt growth.

According to FSC data, household debt reached 911 trillion won ($802.6 billion) in the first quarter of the year, a level already considered unsustainable.

The FSC hence sought to boost housing demand without altering the DTI ratios. This approach is inevitable and appropriate. But the commission’s latest measures are not likely to be of much help in propping up the housing market.

To energize the market, the government needs to come up with bolder measures. In the first place, it should hurry to ease the pains of the so-called “house poor,” people who have purchased a house but now have difficulty servicing their mortgages.

Of the entire household debt, mortgages account for about 390 trillion won or 43 percent. One problem is that about half of the mortgages are either short-term loans that are to mature next year or “bullet loans” whose grace periods are to end next year. Borrowers of bullet loans are required to repay debt all at once upon the expiration of the grace period.

According to a recent survey, three out of 10 homeowners regard themselves as house poor. Already, they spend more than 40 percent of their disposable income to repay mortgage principal and interests.

The government and mortgage lenders need to provide assistance to these people. Otherwise, they will be forced to dump their homes, throwing the housing market into a tailspin.

Banks and other financial companies should start alleviating house-poor individuals’ burden because they are also responsible for their pains. One responsible place to start is to extend grace periods and cut interest rates.

It is also necessary for the government to find ways to help underwater homeowners, people who owe more than their homes are worth. One desirable method would be to allow them to sell their houses under a leaseback arrangement. This step will help put the brakes on plummeting housing prices.

To boost demand for distressed houses, the government can also mobilize private funds. A good way to do this job is to encourage the establishment of real estate investment funds or property investment trust funds. These funds can now offer an attractive return on investment as they can purchase assets at a big discount.