[2020 National Audit] CEO Lee Jeong-hwan "Recommend Apartment Guarantee Ratio Over 50%, Will Improve"

President Seongbaek Wi, President Myeongho Lee of the Korea Securities Depository, President Seongyu Moon of the Korea Asset Management Corporation, and President Jeonghwan Lee of the Korea Housing Finance Corporation appeared at the National Assembly's Political Affairs Committee on the 20th for the national audit of the Korea Deposit Insurance Corporation and others, taking the oath as witnesses. Photo by Dongju Yoon doso7@

[Asia Economy Reporter Park Sun-mi] The Korea Housing Finance Corporation (KHFC) has expressed its intention to improve the recommendation it has been making to commercial banks to maintain an apartment guarantee ratio of over 50%, and said it will also review the possibility of increasing the preferential rate for subscribers of the preferential housing pension.

On the 20th, at the National Assembly’s Political Affairs Committee audit, Song Jae-ho, a member of the Democratic Party of Korea, pointed out as a problem that while the apartment guarantee ratio among KHFC’s housing loan guarantees exceeds 50%, the guarantee ratio for single-family and multi-family houses, where low-income households live, is less than 3%. He criticized that although KHFC was established to expand the housing safety net for low-income households, support the livelihood stability of the elderly, and improve the housing welfare of the people, the current system rather neglects low-income groups.

In response, Lee Jeong-hwan, president of KHFC, acknowledged, "We have recommended each bank to maintain an apartment guarantee ratio of over 50%," and said, "We will review and improve the recommendation to maintain an apartment guarantee ratio of over 50%." However, he clarified, "The recommendation to expand the apartment ratio was not made because single-family and multi-family houses have a higher default rate compared to apartments."

At the audit, there was also criticism that the government’s real estate policy failures have led to an increase in housing pension cancellations. Seong Il-jong, a member of the People Power Party, pointed out, "This year, the number of early cancellations of housing pensions totaled 1,975 over nine months, which is 448 more than last year’s 1,527. Isn’t the increase in cancellations because people think it’s better to sell as housing prices rise?"

In response, President Lee said, "There is demand to cancel and re-enroll due to rising housing prices, and cases where people sell their homes or move in with their children. Although cancellations have increased, they are all within the expected range. It is not a serious excess level." When asked by Representative Seong whether the recent sharp rise in housing prices is a failure of the government’s real estate policy, Lee replied, "There is no direct connection between the government’s housing policy and the increase in housing pension cancellations."

There was also a suggestion to increase the preferential rate for subscribers of the preferential housing pension. Lee Jeong-moon, a member of the Democratic Party of Korea, mentioned that Korea’s elderly poverty rate ranks first among OECD countries and said, "The government has prepared various systems to resolve elderly poverty, and the preferential housing pension is one of them. However, there are many shortcomings. For low-income groups with low income and low housing value, it is necessary to consider a differentiated support plan that expands the preferential rate. The application of the preferential housing pension should be expanded."

President Lee responded, "We are aware of the financial difficulties faced by impoverished elderly. We support additional monthly payments of up to 20% more than the general housing pension for houses valued below 1.5 billion KRW, and in fact, the preferential housing pension benefits are widely received in non-metropolitan areas where housing prices are relatively low. We will review whether it is possible to increase the preferential rate and limit within the scope of available resources."

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