'Jugeo Sadari' Policy Mortgage All Stop, No Place for Homeless Low-Income People to Borrow Money

Most Eligible Loan Handling Also Halted This Year Following Bogumjari Loan
Banks Cautious Amid Household Loan Management Pressure

[Image source=Yonhap News]

[Asia Economy Reporter Kim Jin-ho] The lending window for policy mortgages, which have served as a "housing ladder" for low-income households, has effectively closed this year. Following the suspension of loan applications for the Bogeumjari Loan earlier this year, the Qualified Loan?once considered the "last bastion" for genuine homebuyers?has also come to an almost complete halt. Due to the balloon effect caused by the government's tightening of household debt, it is expected to become even more difficult for low-income, non-homeowners to borrow money.

According to the financial sector on the 18th, the loan limit for this month at Bank A, the only commercial bank still offering Qualified Loans, was exhausted in just one day. The bank's monthly loan limit for Qualified Loans is approximately 11 billion KRW. A bank official said, "You can say it was closed within less than a minute of the limit being allocated," adding, "The loan limit for December is not large either, but there are many customers inquiring, so it is practically like a 'lottery'."

Most commercial banks have temporarily suspended handling Qualified Loans until the end of the year. This means that the handling of Qualified Loans for this year is effectively over.

The Qualified Loan is a policy mortgage introduced by the government to increase the proportion of fixed-rate loans. It is mainly used by non-homeowners or one-homeowners who promise to dispose of their existing home when purchasing a home priced at 900 million KRW or less. Compared to other policy mortgages like the Bogeumjari Loan, the loan limit is higher at 500 million KRW, and there are no income requirements, making it known as the "only hope" for homeownership among dual-income newlyweds.

According to the "Policy Mortgage Supply Performance by Borrower Age Group" received by Lee Jung-moon, a member of the Democratic Party of Korea, from the Korea Housing Finance Corporation, more than half (54.8%) of the supply this year up to September went to people in their 20s and 30s. This is a significant increase from 36.2% in 2018.

The reason banks are reluctant to handle Qualified Loans is analyzed to be the intensified pressure from financial authorities to control the total volume of household loans as the year-end approaches. Qualified Loans have been operated by banks receiving loan limits from the Korea Housing Finance Corporation and then selling the loan receivables to the corporation. However, the Korea Housing Finance Corporation has not been purchasing loan receivables related to Qualified Loans for the past few months, forcing banks, which are focused on total volume control, to slow down their operations.

The problem lies with genuine homebuyers who planned to execute Qualified Loans. Although about 4 trillion KRW of the annual loan limit remains, there are no banks handling these loans, making it akin to "finding a needle in a desert," critics say.

The situation is not much different for the Bogeumjari Loan. As of the 12th, loan applications for this year have effectively ended. If one applied for the Bogeumjari Loan on that day, the loan execution would only be possible on January 7 of next year.

This is due to the rapid influx of demand for policy mortgages caused by consecutive tightening of household loans. The supply amount of the Bogeumjari Loan up to September this year was 18.5 trillion KRW, showing a growth rate similar to last year’s record high of approximately 26.6 trillion KRW.

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