Will the Relaxed Anshim Conversion Loan Ignite Interest Amid Fading Popularity?

[Asia Economy Reporter Song Hwajeong] Starting next month, the eligibility criteria for the Anshim Conversion Loan, which allows switching from variable interest rate or quasi-fixed interest rate (hybrid) mortgage loans to low-interest long-term fixed-rate installment repayment products, will be relaxed from 400 million KRW to 600 million KRW. Until now, the high threshold for the Anshim Conversion Loan resulted in poor performance, but attention is focused on whether this relaxation will benefit actual homebuyers.

On the 27th, the financial authorities announced at the 11th Emergency Economic and Livelihood Meeting that the eligibility criteria for the Anshim Conversion Loan would be eased. The housing price requirement will be expanded from the existing 400 million KRW to 600 million KRW or less, and the income requirement will be relaxed from a combined couple’s income of 70 million KRW to 100 million KRW or less. The loan limit will also be increased from a maximum of 2.5 trillion KRW to 3.6 trillion KRW. The Financial Services Commission plans to accept applications in two phases starting from the 7th of next month with the relaxed eligibility. Those who previously could not apply due to owning homes priced below 400 million KRW will now be eligible, and first-phase applicants can also request a re-examination to apply the expanded loan limit.

The Anshim Conversion Loan is a product that allows low-income and actual homebuyers holding variable or quasi-fixed rate mortgage loans to switch to low-interest long-term fixed-rate installment repayment products, with a supply scale of 25 trillion KRW. The financial authorities accepted applications in two rounds from the 15th of last month to the 17th of this month based on housing prices. The first round, from the 15th to the 30th, targeted homes priced up to 300 million KRW, and the second round, from October 6th to 17th, targeted homes priced up to 400 million KRW. Initially, if the first round’s application volume exceeded 25 trillion KRW, the final recipients would be selected without a second round of applications. However, due to the 300 million KRW requirement, the first round’s applications were low, and although the second round raised the price requirement to 400 million KRW, applications remained low, leading to a two-week extension of the application period until the end of this month. Due to rising housing prices, it was difficult to meet the 400 million KRW housing price requirement in the Seoul and Gyeonggi metropolitan areas, resulting in fewer applicants. According to the Korea Real Estate Board, the average nationwide housing sale price in August was 424.18 million KRW, 621.67 million KRW in the metropolitan area, and 879.29 million KRW in Seoul. During the recent National Assembly audit, there were criticisms that the effectiveness of the Anshim Conversion Loan was diminished due to the combined couple’s income and housing price criteria. From the 15th of last month to the 25th of this month, the cumulative application amount was 3.9 trillion KRW, with 38,000 applications.

The Financial Services Commission had planned to raise the housing price limit and accept additional applications if the application volume fell short of 25 trillion KRW. Accordingly, the second phase has raised the housing price limit to 600 million KRW. With the expanded housing price criteria, a significant increase in applicants is expected this time.

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