[Market Now] FSC plans new policy to spur reverse mortgages

The Financial Services Commission said Wednesday that it would introduce a new set of policies aimed at spurring reverse mortgages in an effort to help the elderly to better prepare for their post-retirement.

In a meeting with officials from the housing sector, FSC chairman Yim Jong-yong said the regulatory body would offer the public the so-called “three sets of housing pension” in order to change the negative perception of home ownership.

He hinted that those aged over 60 with housing loans who seek to convert their debt into reverse mortgages can immediately receive and repay their loans with their pension.

Also, he noted that those in their 30s who seek to subscribe to reverse mortgage plans can take out long-term housing loans at low interest rates.

Korea has been promoting the reverse mortgage program, which enables the elderly to receive monthly pensions after putting their houses as collateral, in the face of rising aging population. Also, the country seeks to change the perception of home ownership from an asset that has to be passed down to the next generation to a pension product.

By Park Hyong-ki (hkp@heraldcorp.com)