'40-Year Mortgage' Scheduled for July Launch Expected to Exclude Residential Officetels

Classification of 'Junjutak' under the Housing Act... Financial Authorities Take a Cautious Stance

Loan counter of a bank (Photo by Yonhap News)

[Asia Economy Reporter Kwangho Lee] Residential officetels are expected to be excluded from the 40-year policy mortgage (housing mortgage loan) scheduled for release in July. Financial authorities plan to apply the current 30-year maximum terms of the Bogeumjari Loan to the 40-year mortgage, but residential officetels are classified as quasi-housing, not housing, under the Housing Act, and thus do not qualify.

According to financial authorities on the 18th, the Financial Services Commission is preparing a 40-year maturity mortgage product targeting youth and newlyweds in collaboration with the Korea Housing Finance Corporation and banking sector.

If the current maximum maturity of 30 years is extended to 40 years, the borrower's monthly principal and interest repayment burden will decrease. For a 300 million KRW loan (interest 2.5%) under the 40-year policy mortgage, the monthly repayment amount is 990,000 KRW, which is 200,000 KRW (16.1%) less than the 1,190,000 KRW under the 30-year maturity.

Financial authorities are considering applying the eligibility criteria of basic policy mortgages such as the Bogeumjari Loan and Qualified Loans to the 40-year mortgage.

The current policy mortgage eligibility is defined as "registered housing that is actually used for residential purposes, including apartments, row houses, multi-family houses, and detached houses." Residential officetels are classified as quasi-housing under the Housing Act.

Last year, the law was amended to allow residents of residential officetels to enroll in the housing pension, providing about 46,000 households the opportunity to join the housing pension, but the door remains closed for policy mortgages.

Accordingly, there are opinions advocating for expanding the policy mortgage eligibility to include residential officetels, but financial authorities are cautious due to difficulties in establishing judgment criteria.

The specific details of the 40-year mortgage are expected to be included in the upcoming "Household Debt Management Plan."

Meanwhile, if the 40-year mortgage is successfully launched, there is a possibility of releasing a 50-year maturity product.

On the 1st, Financial Services Commission Chairman Eun Sung-soo told reporters, "Who would have imagined 10-year government bonds in the past, but now 30-year bonds are issued," adding, "If circumstances change, I think we can also study (the 50-year mortgage)."

Overseas, the United States has ultra-long-term mortgages of 40 to 50 years, and Japan launched a 50-year maturity mortgage product last year.