Mortgage refinancing will not be extended

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Mortgage refinancing will not be extended

After the second round of a government-promoted mortgage refinancing program ended with 156,000 applications for 14.1 trillion won ($13 billion) in debt between March 30 and April 3, the financial regulator made it clear there will be no additional issuances of the low-cost mortgages.

A total of 345,000 applications were made to the Anshim Jeonhwan Daechul program for 33.9 trillion won worth of mortgages at fixed interest rates between 2.55 and 2.6 percent in the first and second rounds over the past two weeks.

Expanding the program to savings banks and other non-bank financial institutions that cater to Koreans with low-income or poor credit histories will not happen, the Financial Services Commission (FSC) said on Sunday in a statement.

Although the FSC had prepared 20 trillion won for the second round and therefore has about 6 trillion won left, it won’t run a third round.

There has been much demand for the mortgage refinancing from people who borrowed to buy properties from the so-called “secondary financial institutions” at higher interest rates.

The first round of the program received 189,000 applications amounting to 19.8 trillion won in mortgages from March 24 through 27.

People living in apartments worth 900 million won or less with mortgages of 500 million won or less were eligible for the government program, allowing them to get a better deal. The program was intended to protect homeowners and the economy from interest rate increases in the future now that household debt in Korea is edging close to a record 1,090 trillion won.

“The FSC will form a task force with the Financial Supervisory Service, Korea Housing Finance Corporation and commercial banks to monitor possible risks in order to help stabilize the market,” the commission said.


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