An elderly man passes by an advertisement for housing loans posted by a commercial bank in Seoul, May 2. Yonhap
By Yi Whan-woo
Park Moon-shik, a 56-year-old office worker, expresses his dismay over the absence of banks offering manageable borrowing rates tailored specifically for his age group. He laments the challenge of securing a loan to assist in purchasing a home.
“These rates are only offered to borrowers in their 20s and 30s,” he said, referring to the government-backed special loan programs aimed at aiding young Koreans in achieving financial stability.
For instance, one program offers a minimum interest rate of 2 percent annually, far lower than the Bank of Korea’s (BOK) benchmark interest rate of 3.5 percent.
“Those programs make me curious whether the banks think peers in my group are capable of making repayments with higher rates because we’ve been working longer than those in far younger groups and saved more money,” Park said.
“In fact, we are possibly in a more pressing circumstance financially than those in their 20s and 30s considering we still have a lot to spend on our children and their education while retirement is approaching,” he added.
Park is not alone in his disappointment over the dearth of support for housing loans and other banking programs tailored to those in their 40s or older. More than half of individuals in this age bracket find themselves without a home, echoing a widespread sentiment of neglect within the system.
According to the Korean Statistical Information Service (KOSIS), a website run by Statistics Korea, a total of 8.94 million Koreans aged 40 to 64 owned a home in 2022. The number accounted for only 44.3 percent of the corresponding age group.
For those aged 65 or older, only 4.02 million or 44.5 percent owned a home.
“The homeownership rate for those aged 40 or older is certainly higher than younger people, but it is unfair that their peers who do not have a house should be excluded from receiving financial benefits because of their age,” said Kwon Dae-jung, a real estate professor at Sogang University.
He referred to a total of 1.76 million or 11.8 percent of Koreans aged 19 to 34 owning a home as of 2022 and corresponding support programs introduced by banks afterward in line with the government’s guideline.
Backed by the Ministry of Land, Infrastructure and Transport, Youth Housing Dream Loan offers an interest rate as low as 2 percent for those aged 19 to 34 who have signed up for the housing subscription savings account.
Those subscribed for over a year become eligible for additional loans at rates as low as 2.2 percent annually if they meet the criteria of being unmarried and earning less than 70 million won per year.
Married couples can also take out the loans at the same rate if their annual income is less than 100 million won combined.
“The programs assist young Koreans to escape financially-pressing circumstance, but such programs appear to be more urgently needed by middle-aged Koreans” Kwon said.
In a survey by Statistics Korea, 60.8 percent of those in their 50s responded in 2022 that they are struggling to cover the educational expenses of their children. Some 58.4 percent of those in their 40s and 53.2 percent of those in their 60s gave the same response.