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64 percent of house poor wish to sell off homes to pay off debts
An increasing number of people are falling short of cash because most of their money is tied up in their homes, becoming house poor.
In a survey of 2,000 families with mortgages in the Seoul area and five other metropolises, 16.2 percent were found to be house poor, KB Financial Group’s Management Research Institute said on Sunday.
These house poor families were spending more than 30 percent of their income to pay back the principal and interest for their loans, and had more liabilities than available assets, meaning they would be unable to repay their debts even by selling off all their non-home assets.
Most house poor, or 96.3 percent, said in the survey that they were finding the repayment of loans extremely burdensome.
About three-quarters of them said they were reducing their spending to pay off the loans.
Sixty-four percent said they would like to sell their homes soon.
As for the reasons for wanting to sell off their home, 26.9 percent said they wished to readjust their asset portfolio, and 25.4 percent cited the burden of repaying loans.
Others said they wished to change the size of their homes (18.7 percent) or to withstand the economic downturn (13.7 percent).
Nearly two-fifths of the house poor were in their 30s and 40s.
Following those in their 30s (19.6 percent) and 40s (18.9 percent) were people in their 50s (13.5 percent) and 60s (11.2 percent), indicating that many people were financially squeezed before and after retirement.
The more expensive the homes, the greater the number of house poor.
Some 22.3 percent of the house poor in the survey had mortgage loans on residential properties worth more than 900 million won.
About 14.5 percent had homes worth between 600 million and 900 million won. Seventeen percent had homes worth between 300 million and 600 million won, and 15.6 percent between 150 million and 300 million won. Only 13.2 percent had homes valued less than 150 million won.
Seoul (17.4 percent) and the surrounding Gyeonggi Province (18 percent) showed the highest rate of house poor families.
In the capital, four of the 25 districts ― which have the most expensive apartments ― accounted for 17.2 percent of the house poor.
“About 26.2 percent of all mortgage loans were taken out by people with a low ability to repay the debts,” the research institute said.
“Such loans taken out by people with low repayment ability take up 21.2 percent of the mortgage loans that reach maturity this year, raising concerns of defaults.”
The rate of overdue mortgage loans has also reached an alarming level, hitting its highest-ever of 0.69 percent in January, according to the Financial Supervisory Service.
The rate of overdue mortgage loans which had jumped with the global financial crisis in 2008 stabilized on the lowered benchmark interest rate and eased regulation on loans, but began to climb recently with resumed regulation on loans and the prolonged property market slump in the Seoul metropolitan area.
By Kim So-hyun (sophie@heraldcorp.com)
An increasing number of people are falling short of cash because most of their money is tied up in their homes, becoming house poor.
In a survey of 2,000 families with mortgages in the Seoul area and five other metropolises, 16.2 percent were found to be house poor, KB Financial Group’s Management Research Institute said on Sunday.
These house poor families were spending more than 30 percent of their income to pay back the principal and interest for their loans, and had more liabilities than available assets, meaning they would be unable to repay their debts even by selling off all their non-home assets.
Most house poor, or 96.3 percent, said in the survey that they were finding the repayment of loans extremely burdensome.
About three-quarters of them said they were reducing their spending to pay off the loans.
Sixty-four percent said they would like to sell their homes soon.
As for the reasons for wanting to sell off their home, 26.9 percent said they wished to readjust their asset portfolio, and 25.4 percent cited the burden of repaying loans.
Others said they wished to change the size of their homes (18.7 percent) or to withstand the economic downturn (13.7 percent).
Nearly two-fifths of the house poor were in their 30s and 40s.
Following those in their 30s (19.6 percent) and 40s (18.9 percent) were people in their 50s (13.5 percent) and 60s (11.2 percent), indicating that many people were financially squeezed before and after retirement.
The more expensive the homes, the greater the number of house poor.
Some 22.3 percent of the house poor in the survey had mortgage loans on residential properties worth more than 900 million won.
About 14.5 percent had homes worth between 600 million and 900 million won. Seventeen percent had homes worth between 300 million and 600 million won, and 15.6 percent between 150 million and 300 million won. Only 13.2 percent had homes valued less than 150 million won.
Seoul (17.4 percent) and the surrounding Gyeonggi Province (18 percent) showed the highest rate of house poor families.
In the capital, four of the 25 districts ― which have the most expensive apartments ― accounted for 17.2 percent of the house poor.
“About 26.2 percent of all mortgage loans were taken out by people with a low ability to repay the debts,” the research institute said.
“Such loans taken out by people with low repayment ability take up 21.2 percent of the mortgage loans that reach maturity this year, raising concerns of defaults.”
The rate of overdue mortgage loans has also reached an alarming level, hitting its highest-ever of 0.69 percent in January, according to the Financial Supervisory Service.
The rate of overdue mortgage loans which had jumped with the global financial crisis in 2008 stabilized on the lowered benchmark interest rate and eased regulation on loans, but began to climb recently with resumed regulation on loans and the prolonged property market slump in the Seoul metropolitan area.
By Kim So-hyun (sophie@heraldcorp.com)
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Articles by Korea Herald
