"I Live Alone"... Bank Sector Youth Jeonse and Monthly Rent Loans Triple Surge

'I Live Alone' Reflects Social Trends
Tripled Compared to Late Last Year
Monthly Record Highs Continued

On the 5th, from the observation deck of Lotte World Tower in Songpa-gu, Seoul, where apartment prices and jeonse prices continue to rise without turning downward, apartments in the Gangbuk area are being observed. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Park Sun-mi] The scale of youth-tailored jeonse and monthly rent loans by commercial banks has tripled since the beginning of the year. This is attributed to the increased demand for policy financing among young people due to rising real estate prices, as well as the growing number of young people dreaming of independent living spaces.

According to the financial sector on the 8th, the total amount of youth-tailored jeonse and monthly rent loans from three major commercial banks stood at 1.0689 trillion KRW as of the end of September. This is more than three times the 346.2 billion KRW recorded at the end of December last year. All banks are setting new monthly records. For Bank A, the number of accounts for the youth-tailored jeonse and monthly rent loan product, which was only three when first launched in May last year, increased to 5,072 by the end of September this year.

The youth-tailored jeonse and monthly rent loan was launched in May last year by the Financial Services Commission in collaboration with the Korea Housing Finance Corporation and commercial banks to stabilize housing for young people without homes. It supports deposits (up to 70 million KRW) and monthly rent (up to 500,000 KRW per month) at an interest rate in the 2% range for youth aged 34 and under. The eligible annual income for the loan is 70 million KRW or less.

The increase in youth jeonse and monthly rent loans reflects the social trend of "living alone," with a rapid rise in single-person households among young people. According to Statistics Korea, the number of single-person households, which was in the early 5 million range in 2015, exceeded 6 million last year. The increase in single-person households is influenced by more young people either giving up on marriage or marrying later. The crude marriage rate, which indicates the number of marriages per 1,000 people, recorded an all-time low of 4.7 last year since statistics began in 1970.

Additionally, the rapid rise in real estate sales prices and rents, to the extent that young people have no choice but to rely on policy financing, has also contributed to the increase in youth jeonse and monthly rent loan volumes. In a survey on "perceptions of home ownership" conducted among 2,889 young people in their 20s, 78% of respondents expected housing prices to continue rising, and 80.5% anticipated that rents for jeonse and monthly rent would also increase in the future.

Accordingly, the Financial Services Commission increased the supply scale of youth-tailored jeonse and monthly rent loans from 1.1 trillion KRW to 4.1 trillion KRW in March this year, adding 3 trillion KRW to enable more young people without homes to benefit. The Commission expects up to 80,000 young people to receive benefits from these loans.

Banks foresee that the demand for monthly rent loans among young people who find it difficult to prepare large sums of money will surge further and are actively launching financial products dedicated to monthly rent. Shinhan Bank recently added a monthly rent loan to its mobile-only "Solpyeonhan Jeonse Loan." By submitting a monthly rent contract, borrowers can receive loans up to 50 million KRW for a maximum of 24 months. Woori Bank is currently offering the "Woori Youth Tailored Monthly Rent Loan" product, which allows youth aged 34 and under to borrow up to 12 million KRW at an interest rate in the 2% range.

This content was produced with the assistance of AI translation services.