[Current Status of Yeongkkeuljok] "Bought at the Peak and Lost Everything"... Tears of a '1-Year Yeongkkeuljok'

People Who Bought Houses in the Last 1-2 Years: The Most Devastated Yeongkkeul Borrowers
House Prices Dropped by Hundreds of Millions, Monthly Interest Up by Tens of Thousands of Won

Giant Step in the US on the 3rd, Bank of Korea Rate Hike Confirmed on the 24th
By Year-End, Interest Burden Could Increase Up to 8%

"I should have rented at that time... I bought at the peak, and house prices dropped while interest rates rose. Among the 'Yeongkkeul' group, those who bought houses within the last 1-2 years are the worst off cases."

Lee Dae-ho (43), who lives in Ahyeon-dong, Mapo-gu, Seoul, joined the ranks of the Yeongkkeul group this January. Lee, a salesman at a large corporation, lived in Daejeon until last year before being transferred to the Seoul branch. The 113㎡ (34-pyeong) apartment he bought with great determination was priced at 1.65 billion KRW at the time of contract. At the time of purchase, it was excluded from mortgage loan eligibility. "Since I couldn't get a mortgage loan, my wife and I, both working, used our annual leave and went from bank to bank to get patchwork loans."

Lee took out 200 million KRW in living stabilization loans split between two banks using his house as collateral. Although the loans had fixed interest rates, they were 5.3% and 4.8%, so the interest burden was high from the start. He also took out 300 million KRW in unsecured loans, divided among four banks. When he borrowed, the unsecured loan interest rates were around 3-4%, but now they have jumped to 5-6%. While interest rates have risen, something has fallen: the house price. The recent market price of Lee's apartment is 1.37 billion KRW, down 300 million KRW from when he bought it.

The Most Pitiful Yeongkkeul Group: Those Who Bought Houses in the Last 1-2 Years

"When I bought the apartment, the monthly interest was 1.9 million KRW, but now it's 2.3 million KRW. I also pay 500,000 KRW monthly toward the principal separately. Since both the U.S. and Korea are raising benchmark interest rates, the interest burden will only increase. As my children advance in school, education expenses will rise, and to repay the loans, I have to tighten my belt. If only house prices stabilized, I might have the strength to repay, but I completely mistimed the market."

Among the Yeongkkeul group, those like Lee are the most unfortunate. They have to endure falling house prices and rising interest rates immediately after buying their homes within the last 1-2 years. Choi Eun-ji (32), who bought a house two years ago in Donam-dong, Seongbuk-gu, Seoul, is also in this situation.

"Everyone was saying, 'If you don't buy today, you'll never be able to.' I felt like I'd remain homeless forever if I stayed still, so I forced myself to buy an apartment in August 2020. I paid over 800 million KRW, but now it's dropped to 700 million KRW. I'm so scared it will fall further that I check Naver Real Estate several times a day."

Choi showed the recent notice of her unsecured loan interest rate and said, "When I bought the house, I even made a 100 million KRW overdraft account, but this month the interest rate exceeded 5%. I’m relieved that my mortgage loan is fixed-rate, but with house prices falling, I just feel ruined. These days, I even hesitate to buy coffee."

Financial Loss and Emotional Fatigue... Yeongkkeul Group Without Solutions

There seems to be no clear solution to the difficulties faced by the Yeongkkeul group. They have no choice but to endure falling house prices and rising interest rates. Even Lee Chang-yong, Governor of the Bank of Korea, has confirmed the 'lack of solutions.'

"The 2030 generation has never experienced inflation, so if they borrowed money at an annual interest rate of 3%, they might have thought it would stay at that level for life. However, given the current economic situation, that assumption can change. It is advisable to make decisions keeping in mind such risks." (On the 13th of last month, right after a 0.5 percentage point increase in the benchmark interest rate)

As of the 31st of last month, the variable mortgage loan interest rates at the five major banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) ranged from 5.02% to 6.61%, fixed rates from 5.35% to 7.33%, and unsecured loan rates from 5.95% to 7.55%. It is widely accepted that the U.S. Federal Open Market Committee (FOMC) will take a 'giant step' by raising rates by 0.75 percentage points on the 3rd, and that the Bank of Korea will further raise the benchmark rate on the 24th of this month. That is why predictions say that by the end of the year, the upper limit of mortgage and unsecured loan interest rates will reach the 8% range.

Bang Tae-won (37), a Yeongkkeul group member living in Hongje-dong, Seodaemun-gu, said, "As a Yeongkkeul member, I hope for interest rate and house price stability, but when I see comments on portal sites or internet communities like 'Wasn't this your own choice?' or 'Those who borrowed heavily to invest should handle it themselves,' I honestly have nothing more to say," lowering his head.