Applications for the special Bogeumjari Loan, a loan product supported by the government, have started, and over 9 trillion won have been applied for within a week, which may seem impressive, but it is important to note that the supply target set by the government is 39.6 trillion won, of which only 23% has been met within a week. While the special Bogeumjari loan is a policy mortgage that allows loans of up to 500 million won for houses of less than 900 million won, and can be loaned for up to 50 years at a low fixed interest rate of 3% per year, it is not a silver bullet for the housing market.
It may have the advantage of being able to change loans at any time and has no prepayment fee, but it is still limited to end-users only. While it can be applied not only for purchasing a house, but also for the purpose of repayment of an existing loan or return of deposit on a deposit basis, it is difficult to ignore the fact that the demand class who have low levels of income and holdings may still struggle to decide on a purchase.
Additionally, although the housing transaction volume in February is likely to increase compared to the previous month, with the increase in transaction volume centering on apartments in the metropolitan area after the government’s removal of the majority of Seoul from the regulated area on January 3, it is crucial to note that this is only a short-term effect.
Looking at the proportion of apartments in stock by market price section nationwide and in major regions, 60% of apartments nationwide are below 600 million, 20% are over 600 million and below 900 million, and 20% are over 900 million won. It can be said that 80% of apartment types nationwide are included in the subject of special bogeumjari loan. However, in the case of Seoul, only 34% of apartments worth 900 million won or less are subject to special housing loans, which is a concern. Although the scope of housing is expanded to non-apartment types, and the number of eligible loans further increases, this may not be enough to address the issue.
Furthermore, the fact that the LTV loan regulations for multi-homeowners will be eased from March 2018 is not enough to guarantee a rebound in housing transaction volume, as the DSR for multi-homed people has not been ruled out. Loan regulations have been excessively restricting multi-homed people, and it is necessary to focus only on normalizing these regulations.
Finally, looking at the ownership structure of domestic inventory housing, the proportion of single-homeowners is overwhelming at 73%, and out of all households (21.5 million households as of 2021), non-homeowner households account for 43.6% (9.38 million households). While the special Bogeumjari Loan may benefit some, it is not a solution that addresses the needs of a large portion of the population who are non-homeowners.