The government said Sunday it was preparing a new package of tax breaks and deregulation to boost domestic consumption, including easing mortgage lending rules, which have been criticized by industry insiders as a key factor depressing the property market.

According to the Presidential Office, the planned measures aim to spur private spending, revive a sinking local housing market and induce foreign investment. They include tax breaks on golf courses; relaxed rules on new casinos; abolishment of controversial property-market measures, such as a price cap on new apartments and a punitive capital gains tax on multiple home owners; and an easing of a debt-to-income ratio rule in mortgage lending.

The measures were devised at a meeting Saturday between government policymakers and private economists and industry representatives. President Lee Myung-bak presided over the meeting, which lasted more than 9 hours.

“A follow-up meeting of economy-related ministry officials is scheduled for Monday, where those measures will be discussed in detail,” Kim Dae-ki, presidential secretary on economic affairs told reporters.

The proposed change in DTI rules is expected to help revitalize housing transactions that have been virtually frozen for years.

The DTI rate serves as a major tool to control housing loans by tying the maximum amount of money that home buyers can borrow to their income levels. The ceiling is 40-60 percent in Seoul and the surrounding Gyeonggi Province, the nation’s most populous region.

“The core of the DTI regulations will remain untouched, but we look to amend the rules so that those who want to buy a home to really live in, not for a speculative purpose, can do so,” Kim said.

Officials at the Finance Ministry said the envisioned change is likely to affect retirees who are asset-rich but income-deficient to give them easily access to mortgage loans.

A drastic easing of the lending rules is unlikely, they said, as it could accelerate the growth of housing loans, which many foreign investors say have reached a level that poses a risk to Korea’s economy.

By Lee Sun-young  (milaya@heraldcorp.com)