Banks are strengthening reverse mortgage products targeting high-priced homes. Attention is being paid to whether the private housing pension market will be revitalized.
Starting this month, Hana Bank will begin selling ‘Hana Reverse Mortgage Loan’, a reverse mortgage (house pension) product for apartments exceeding the publicly announced price of 1.2 billion won. Only owners of residential facilities with a publicly announced price of KRW 1.2 billion or less can subscribe to the housing pension guaranteed by the Korea Housing Finance Corporation, but the plan is to provide living fund loans using houses exceeding this amount, especially apartments, as collateral. Apartments with an actual transaction price of 1.7 billion won or more are expected to be targeted.
With the joining of Hana Bank, three of the four major commercial banks, excluding Woori Bank, KB Kookmin, Shinhan, and Hana Bank, now have their own reverse mortgage products. A Hana Bank official said, “There was a need for a reverse mortgage loan among customers who own expensive homes and cannot receive a guarantee from the Korea Housing Finance Corporation,” and added, “It will be similar to a general mortgage loan without applying the guarantee.”
Currently, the reverse mortgage products mainly handled by the banking sector are residential homes with a publicly announced price of KRW 1.2 billion or less for which the Korea Housing Finance Corporation issues a guarantee. Private reverse mortgage products are being operated by Kookmin Bank and Shinhan Bank before Hana Bank, but the supply has been minimal and has had virtually no significance so far. Local agricultural and livestock cooperatives are operating ‘pension-type living fund loans’ using real estate as collateral, but this is also not large in scale.
Meanwhile, some analysts say that the launch of a new mortgage product for apartments exceeding the publicly announced price of 1.2 billion won is proof that the asset management market targeting 'new seniors' who own a so-called smart house in the Seoul and Gyeonggi regions is heating up. .
The recent trend of rising housing prices and the slowdown in reverse mortgage loans guaranteed by homeowners is also considered one of the reasons why banks are aggressively expanding their operations.
According to the Korea Housing Finance Corporation, as of April this year, the number of new subscribers to the housing pension this year was 5,240 (cumulative), a 22% decrease from the same period a year ago (6,487). There were 341 cancellations last April, a 34% increase from a year ago (255). The analysis that expectations of rising housing prices had an influence is gaining strength.
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A bank official said, “With the actual transaction price of a national apartment (84㎡) in major areas of Seoul and Gyeonggi exceeding 2 billion won, we are focusing on products targeting the baby boomer generation who have retired and own an apartment as an asset. “In particular, in a situation where real estate accounts for more than 70% of domestic household assets and the aging of society is accelerating, there is a great need to change the reverse mortgage market in various ways other than government guarantees,” he said.