More than 80 percent of applicants for reverse mortgages in recent years have been owners of high-rise apartments, data from the Korea Housing Finance Corp. showed Sunday, spurring concerns about inequitable access.
Reverse mortgages were introduced in South Korea in 2007 and allow homeowners, mainly senior citizens, to receive payments on a monthly basis by borrowing against the value of their homes.
From January to August, 6,636 people signed contracts with banks to borrow money by providing their homes as collateral, the state-run institution data acquired and distributed by a lawmaker here showed.
Of properties that were offered as collateral, apartments in high-rise complexes accounted for 79.5 percent of the total, or 5,273 contracts, while owners of detached homes signed only 552 such contracts. Owners of units in low-rise, multiresidential housing accounted for 573 reverse mortgage contracts, while retirement community housing and mixed-use buildings accounted for 35 and 21, respectively.
Since 2016 apartment owners have made up over 80 percent of reverse mortgage applicants and recipients. In 2016, high-rise apartment owners accounted for 84.2 percent of all applicants and the figure has fluctuated since then -- from 83.7 percent in 2017 to 82.4 percent in 2018 and 81.4 percent in 2019.
The data fueled concerns about inequality, as high-rise accommodation is typically owned by wealthy people. The lack of reverse mortgages issued for other kinds of housing could indicate that poorer people are losing out.
Onlookers say that it may be a different type of inequality in which banks prefer apartments as collateral when assessing applicants.
“By looking into the cause behind the gap we will cooperate with relevant institutions and agencies whether owners of all types of housing are benefiting from the mortgage scheme,” Democratic Party of Korea Rep. Yoon Kwan-seok said.
By Jung Min-kyung (firstname.lastname@example.org)