A notice regarding credit loans from a savings bank. Yonhap News
Mr. Yang (45) became confused after seeing the stepping stone loan management plan announced by the government on the 6th. Last April, he received a private apartment on public housing land in Unjeong, Paju, Gyeonggi-do. The selling price is less than 500 million won. In a phone call on the 11th, Mr. Yang said, “I already had some down payment, so I planned to borrow 150 million won as a stepping stone loan for just the balance.”
Mr. Yang’s plan went awry after the government announced its stepping stone loan management plan. This is because, based on the sales notice, the collateral was changed to apply only to those who move in in the first half of next year. Post-possession collateral is a loan in which a bank first lends the balance of a ‘new apartment before completion’ that cannot be registered because there is an apartment building but no approval for use or completion has been obtained, and then converts it into collateral once ownership is established after the housing is completed. The expected move-in date for the apartment purchased by Mr. Yang is April 2027. Mr. Yang said, “The biggest problem is for prospective tenants like us who cannot get a stepping stone loan due to the ban on collateral collateral.”
In announcing the Stepping Stone Loan Management Plan, the Ministry of Land, Infrastructure and Transport decided to require air defense (highest priority payment deduction) for new residents in the metropolitan area after June 30 of next year, excluding some exceptions, and completely prohibit collateral for the remaining balance.
Stepping Stone Loan is a policy finance product that provides loans of up to 70% LTV (value-to-value ratio) to homeless people with an annual income of 60 million won or less. The interest rate is 2.65-3.95%, which is lower than the 4-5% range for commercial bank mortgage loans.
The external reason for the government to manage stepping stone loans is to control the rapid rise in housing prices and ensure the financial soundness of the Housing and Urban Fund. However, some point out that the government has decided to use housing and urban funds to make up for a huge tax revenue deficit, thereby restricting lending to the common people.
Stepping stone loan without ‘back collateral’, refinance impossible
The Ministry of Land, Infrastructure and Transport completely banned post-deposit collateral for complexes moving in after July 1 of next year according to the sales announcement, and in effect, winners of apartments under 600 million won in Gyeonggi and Incheon that were sold this year were unable to receive stepping stone loans. After receiving a balance loan from a commercial bank and receiving a registration, refinancing to a stepping stone loan was also prohibited, so the opportunity to receive a stepping stone loan disappeared.
Provided by the Ministry of Land, Infrastructure and Transport
Prospective residents who were blocked from receiving a Stepping Stone loan were put in a position where they had to pay the immediately higher loan interest rates. The Ministry of Land, Infrastructure and Transport’s position is that there is no problem in receiving a loan because group loans are available for newly built apartments, but prospective residents are responding by asking, “What should we do about the increased interest burden?”
Mr. Han (47), who received an apartment in Geomdan, Incheon last year, said, “I quickly looked into loaning the balance, and they said that the interest rate for a home loan would be over 4%, and the interest rate for a group loan would be about 4.6%,” adding, “Considering monthly hospital expenses, etc., it is a stepping stone.” “If I don’t get a loan, I won’t be able to afford the loan interest,” he said.
Lee Eun-hyeong, a researcher at the Korea Construction Policy Institute, said, “The rise in housing prices in major regions, including Seoul, in the first half of the year is a natural rebound following the contraction in housing transactions last year, so it is wrong to touch on policy funds for this reason.” “I have no choice but to pay interest,” he said.
Reporter Ryu In-ha acha@kyunghyang.com
