Housing Finance Corporation Offers 'Green Bogeumjari Loan' to People in Their 70s
40-Year Maturity Bogeumjari Loan, 19 Cases for Those Aged 60 and Over
Despite National Audit and Authorities' Orders, Insufficient Revision of Ultra-Long-Term Product Processing Standards
Assemblyman Kang Hunsik: "Same Issues Occur in Newly Launched Products... Detailed Product Design Needed"
Amid heightened lending standards in the banking sector due to the financial authorities' comprehensive regulations to manage the rapidly increasing household loans, controversy has arisen over the Korea Housing Finance Corporation (HF) providing a 40-year maturity mortgage loan product called 'Green Bogeumjari Loan' to elderly borrowers in their 70s.
According to data received by Kang Hoon-sik, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, from HF on the 14th, HF executed the 40-year maturity Green Bogeumjari Loan product for elderly borrowers over 70 years old in December last year. As of this month, 40-year maturity Bogeumjari Loan loans were recorded as 19 cases for those aged 60 and above, and 1 case for those aged 70 and above. For the 30-year maturity, there were 16 cases for those aged 60 and above, and 5 cases for those aged 70 and above.
Kang's office explained that these loans were launched and executed after September last year, when the financial authorities identified ultra-long-term mortgage loan products with 40 to 50-year maturities as a cause of household debt increase and began regulating them.
The Green Bogeumjari Loan was launched in September last year and offers a 40-year maturity and a preferential interest rate of 0.1 percentage points (P) regardless of age if the property has received a Level 2 or higher Green Building Certification. During last year's national audit, ultra-long-term mortgage loan products were criticized as one of the causes of household loan increases, leading HF to restrict the 50-year maturity mortgage loans to those aged 34 or younger starting January this year. For newlyweds, the product is only available to those aged 39 or younger.
However, according to the recently confirmed HF's Bogeumjari Loan operational guidelines, for 40-year maturity mortgage loans, borrowers can receive loans if they are aged 39 or younger or if the collateral property is a Level 2 or higher green building. This means that borrowers aged 70 and above can still receive the 40-year maturity Green Bogeumjari Loan. HF has stated that it is currently revising the operational guidelines related to the Bogeumjari Loan.
Last year, the financial authorities strengthened the standards for ultra-long-term mortgage loan products for commercial banks. Commercial banks either stopped offering 50-year maturity mortgage loans or introduced an age limit of 34 or younger for loans exceeding 40 years. While commercial banks tightened their standards following the financial authorities' directives, Kang's office claims that HF did not reflect these regulations.
Assemblyman Kang stated, "During last year's national audit, the 50-year maturity special Bogeumjari Loan was criticized for being executed for elderly borrowers in their 60s, and the same issue has occurred again with the newly launched product." He added, "Both the executing agency, HF, and the supervisory agency, the Financial Services Commission, must carefully design products in line with the original purpose of policy finance to ensure appropriate support is provided where needed."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
