Frenetic start, but offer ends quietly

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Frenetic start, but offer ends quietly

The second application period for the new government-backed mortgage loan known as anshim jeonhwan daechul ended on Friday with a much more subdued atmosphere compared to when it was released on March 23.

The Financial Services Commission (FSC) on Friday said the total amount of loans sought will probably not exceed the cap of 20 trillion won ($18.3 billion), meaning all applicants are likely to be approved.

The Ministry of Strategy and Finance introduced the fixed-rate mortgage program a couple weeks ago to reduce household debt burdens and stabilize the financial market.

The program allowed people with existing short-term flexible interest rate loans that force them to pay back the debt in a lump sum to move to a long-term fixed rate mortgage of about 2.65 percent and repay the debt in installments.

According to the FSC, nearly 106,850 loan applications worth a total of 9.5 trillion won ($8.7 billion) had been filed this week through Thursday. Late Friday, it estimated the total for the week at 14 trillion won.

When the program was launched, the popularity of the loan offer far exceeded expectations and forced the FSC to double the annual cap from 20 trillion to 40 trillion won.

Because so many applicants flocked to banks in the first week, the government planned to give owners of low-priced houses preference if the application total exceeded 20 trillion won.

But because the total amount requested was just over half the government’s allocation, all applicants are likely to be approved.

Throughout the week, number of applications rose steadily, from 3,142 billion won on Monday and Tuesday, to 2,831 billion won on Wednesday and 3,543 billion won on Thursday.

Applicants will be notified on Monday and Tuesday.

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