A government-led loan transfer program aiming to ease interest burdens for low-income borrowers was found to have also benefited high-income earners, according to data submitted Tuesday.
According to an analysis submitted by the Financial Services Commission to the parliamentary committee of state affairs, 5 in 100 successful candidates of the program that swaps high variable-rate mortgage loans for long-term, lower fixed-rate ones earned 100 million won ($91,200) or more annually.
The program, called “ansim jeonhwan daechul,” has benefited 459 customers, or 4.7 percent of the 9,830 cases, who had a yearly income of 100 million won or more.
Based on this sample, up to 16,100 high-income earners may be benefiting from the loan transfer program, according to the FSC. Last month, banks approved loan transfers worth 34 trillion won to 345,000 applicants, it added.
Further, the average price of the mortgaged houses owned by the 459 high-income earners was 450 million won, far exceeding the average of 100 million won.
Outside of the 5 percent upper cluster, the general income of the loan transfer beneficiaries was relatively high. Their average yearly income was 40 million won, higher than the national average, which was 38.2 million won last year.
The majority of loan transfers was approved in the metropolitan area, indicating a regional imbalance. Seoul accounted for 1,507 cases or 15.3 percent of the total, while Gyeonggi Province and Incheon accounted for 30.9 percent and 8.8 percent, respectively.
“The loan transfer was meant for the lower income bracket but ended up favoring high-income earners at the taxpayers’ expense,” said Rep. Shin Hak-yong, a lawmaker of the main opposition New Politics Alliance for Democracy and member of the committee.
The loan transfer program was envisioned to allow applicants to switch to a low fixed rate under the credit guarantee of the Korea Housing Finance Corporation. The government thus uses tax funds to increase the capital of the state-run company and to maintain its credit rating.
By Bae Hyun-jung (tellme@heraldcorp.com)