Default-prone borrowers at 190,000: FSS
The number of multiple-loan borrowers who are not able to pay back mortgages to lenders even after selling off their houses on auction totaled 190,000 as of October, according to a study by the Financial Supervisory Service released yesterday.
The amount of mortgages taken out by 190,000 multiple-loan borrowers represents 13 trillion won ($12 billion), or 3.3 percent of the 394.9 trillion won in home-backed loans extended by local financial institutions.
A multiple-loan borrower is someone who has taken out loans from more than two different nonbanking firms such as savings banks or insurance or credit card companies, according to the FSS.
According to the financial regulator, the average auction clearance rate tallied from January to October stood at 76.4 percent.
This means a borrower with an apartment at an appraised price of 100 million won ends up getting 76.4 million won when it is sold off in auction.
The FSS said 190,000 people have borrowed mortgage loans higher than the current clearance rate and they’re not able to repay the full amount of the loans.
Among the 190,000 people, 180,000 who have taken out 12.2 trillion won reside in the greater Seoul area while the remaining 800 billion won loans were taken out by people who live in other regions.
“Mortgage borrowers in the greater Seoul area are heavily affected as housing prices in and around the capital have dipped greatly compared to other areas,” said Yang Hyun-geun, an official at the FSS. “This group would be more vulnerable and suffer more when housing prices go down further.”
The FSS said the potential default risks in the low-credit group are increasing.
By Kim Mi-ju [firstname.lastname@example.org]