Since December of last year, the amount of applications, which used to be in the 7 trillion KRW range per month with a combined income of 2 billion KRW for couples, surged to over 10 trillion KRW in December last year and January. The photo shows an apartment complex in Bundang-gu, Seongnam-si, Gyeonggi-do. According to a report, the government’s easing of income requirements for the ‘Newborn Special Loan’ led to more than one trillion KRW in applications each month.
Income requirements were relaxed from 1.3 billion KRW to 2 billion KRW starting in December last year. According to data submitted by the Ministry of Land, Infrastructure and Transport to Representative Lee Yeon-hee of the National Assembly’s Democratic Party of Korea, the total loan applications received from January 29 of last year, when the newborn loan was launched, to January 30 of this year amounted to 13.2458 trillion KRW.
The newborn loan includes △home purchase funds (Didimdol Loan) and △lease funds (Butimok Loan). Purchase applications accounted for 10.1818 trillion KRW or 76% of the total, with the remainder being lease funds.
Out of the total applications received over the year, actual loans issued amounted to a total of 10.3438 trillion KRW, with 7.6711 trillion KRW allocated for purchase funds and 2.6727 trillion KRW for lease funds.
Eligibility for the newborn loan targets non-homeowner households or single-homeowner households (for refinancing) that have given birth or adopted within two years before applying. Eligible homes must be worth 900 million KRW or less with an exclusive area of 85㎡ or less, and applicants can borrow up to 500 million KRW.
However, since December of last year, the combined income threshold for couples was eased from 1.3 billion KRW to 2 billion KRW, leading to a surge in purchase fund loan applications. Purchase fund loan applications were in the 7 trillion KRW range monthly between July and September last year, increased to 9.403 trillion KRW in October, then fell to 7.998 trillion KRW in November.
The relaxation of income requirements began in December last year, resulting in applications amounting to 10.686 trillion KRW and 10.455 trillion KRW in January this year. It appears that high-income couples, whose annual income exceeds 1.3 billion KRW but is below 2 billion KRW, flocked to apply for loans.
The government announced plans to further ease the income requirements for newborn loans and will relax the requirement for households that give birth between this year and 2027 to 2.5 billion KRW. However, considering the trend of increasing household loans, the implementation has not yet been carried out.
The government faces the challenging task of managing the scale of policy loans while considering policy objectives, such as stabilizing housing for ordinary citizens and increasing birth rates.