Government Pushes Plans for Home Mortgage Loan Extension

The government is pushing plans to change over half of the current three-year expiration home mortgage loans to long-term loans with a maturity of over 10 years in the upcoming five years.

The Finance-Economy Ministry and the Financial Supervisory Commission (FSC) announced the “financial stabilization plan for the public,” including these details, at a meeting to examine the ongoing stabilization plan for the public under the superintendence of acting President Goh Kun at the Central Government Complex in Seoul yesterday.

Finance-Economy Ministry officials said, “Of the home mortgage loans currently totaling to some 150 trillion won, 70 trillion will be changed to the Korea Housing Finance Corporation’s mortgage loans (long-term) or long-term loans from banks, and we hope to lessen the burden from the concentrated maturity.”

The FSC authorities explained “We are planning to give various incentives to induce banks to positively change their short-term loans to a long-term.”

However, the government has not announced in detail how they will carry out the plan to change the maturity of home mortgage loans to long term.

From this, some have pointed out that with the election coming up in just three weeks, the government is conscious of this fact and is excessively bringing out stabilization plans for the public.

At this meeting, the Finance-Economy Ministry also announced their plans to continuously push to reduce private education expenses and support the low-income bracket, and stabilize the consumer price inflation ratio to around three percent.

Concerning the mortgage loan starting sale on March 25, the Korea Housing Finance Corporation has decided to give benefits allowing the loan-to-value (LTV) ratio to reach a maximum of 70 percent and deduction of up to an annual 10 million won in interest.

The Commerce, Industry and Energy Ministry, and Small and Medium Business Administration have decided to increase the management stabilization fund for small commerce-industry businesses by 1,500 trillion won from the original plan to 4,000 trillion won, and expand the existing bill insurance so that account receivables can be put into insurance.

Chi-Young Shin higgledy@donga.com