Introduction of a 40-year mortgage loan “It is the introduction of a low-cost apartment housing ladder outside of Seoul”

Input 2021.02.22 17:07

When it was revealed that it was reviewing measures to increase the maturity of mortgage loans and reduce the total debt principal repayment ratio (DSR) applied to young borrowers, it is positive that the housing ladder for young people will be strengthened. There are many analyzes that it will relieve the breath of those who want to buy houses in metropolitan areas such as Gyeonggi and Incheon, rather than in Seoul. Real estate experts emphasized that it is necessary to make the way for homeless people, such as young people, to find their own home by easing loans.

On the 14th, the Financial Services Commission announced that it will introduce a 40-year mortgage loan product for young and newlyweds as one of the key initiatives for this year’s financial consumer sector. That’s five years longer than the longest mortgage, the 35-year-old. In addition, while converting the DSR management method to individual review by borrowers (loans), it is reviewing a method of mitigating the DSR rate up to 60% for young people. The higher the DSR ratio, the higher the loan limit for low-income youth.

Thanks to this, if you borrow 300 million won at an annual interest rate of 2.5%, the monthly repayment amount will be 1.19 million won at maturity of 30 years, but if it is extended to 40 years, it will decrease 16.1% to 990,000 won. In addition, by easing DSR, an employee with an annual salary of 60 million won can receive a 3% mortgage loan, and the existing limit is 470 million won, which can be increased to 560 million won.

According to the real estate industry on the 22nd, if the authorities introduce a 40-year mortgage loan, it will benefit the youth who want to buy apartments in the metropolitan area or local regions rather than Seoul. This is because the requirements for signing up for a 40-year mortgage loan product are expected to come out similar to the requirements for a bogeumjari loan. The Korea Housing Finance Corporation puts a qualification on the long-term fixed interest rate and installment repayment mortgage loan,’when purchasing an annual income of 70 million won or less and a house price of 600 million won or less’.

In this case, it is not easy to purchase a Seoul apartment and receive a 40-year mortgage loan. According to Real Estate 114, the median price of apartments in Seoul last year exceeded 900 million won, and the proportion of apartments under 600 million won in Seoul decreased from 34% in 2019 to 20% in 2020. Park Hap-soo, a senior real estate expert at KB Kookmin Bank, said, “It will be especially useful when purchasing a housing outside of Seoul.”

Of course, some are concerned that the price of mid-to-low-priced apartments in the metropolitan area and provinces will reach the height of 600 million won, thus stimulating the buying trend. After the government regulated loans, the prices of mid- to low-priced apartments under 600 million won in downtown Seoul, where loans with Bogeumjari loans are available, have risen all at once.

However, most real estate experts predicted that even if there were some side effects, it would help stabilize housing prices by providing a residential ladder to the end-users, young people, and stopping panic buying. In a situation where the supply of housing is not easy in a short period of time, it is better for the panic buying demand to calm down, saying that it is impossible to buy a house unless it is now.

Park Hap-soo, a senior real estate expert at KB Kookmin Bank, said, “A young man with low income who stayed in the rental market and had a low level of luck in the real estate market and single-income will help newlyweds and others to find a home.”

Shim Gyo-eon, a professor of real estate at Konkuk University, said, “As the government tightens regulations on housing loans, there are more people who want to buy a house, but the demand for staying in the rental market has increased, which intensifies the uncertainty in the rental market. Considering the fact that the panic buying a house has occurred, it is necessary to release the regulation on loans to homeless consumers who can afford to repay loans, including young people.

There were also voices that there was a need to deregulate the homeless people without limiting them step by step. Go Jun-seok, adjunct professor at Dongguk University’s Graduate School of Law, said, “Because panic buying is not only for young people, it is necessary to ease regulations so that end-users can buy a house without limiting income standards or some age groups.” He added, “In particular, there is a need to diversify financial benefits for first-time home buyers and raise income standards.”