Eun Sung-soo on 50-Year Mortgage Proposal: "Longer Term Reduces Cost Burden"

[Asia Economy Reporter Song Seung-seop] Eun Sung-soo, Chairman of the Financial Services Commission, responded positively to Lee Nak-yeon, Co-Chairman of the Democratic Party of Korea's joint election committee, proposing the ‘50-year maturity mortgage loan national guarantee system’ for young and newlywed generations to purchase their first home.

On the 1st, after a meeting with bank presidents, Chairman Eun told reporters, "If the mortgage period is longer, the amount paid decreases," adding, "We are currently preparing to introduce a 40-year mortgage, and the 50-year maturity mortgage proposal made the day before was probably meant to suggest that a longer period would be better to reduce the burden on young people."

Regarding the controversy over the effectiveness of ultra-long-term mortgages, he said, "For example, even if a 40-year mortgage is practically taken out, it does not mean that one must repay it from age 30 until 70,” and added, “Typically, people move houses every 7 to 10 years. They repay as they save money, so it can serve as a housing ladder. With a 50-year mortgage, it would be possible to reduce costs further."

Meanwhile, on the possibility of easing household loan regulations for young people and the homeless in the upcoming household loan advancement plan to be announced next month, he said, "There is a consensus that household loans must be stabilized because they can become a bomb later, but if the Debt Service Ratio (DSR) regulation is strengthened, young people with no income will face a loan gap."

He continued, "We are considering easing the Loan-to-Value ratio (LTV) for young people and the homeless who have difficulty securing housing stability," but added, "However, we have consistently sent messages to reduce household loans and prevent real estate speculation, so there are concerns that easing the LTV for young people and the homeless might signal a policy retreat. This is a part we are concerned about."

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