Tag: mortgages

I can understand the bank’s perspective on this if someone cannot prove they are going to be employed longer than a year. I think even a Korean citizen would have a hard time being approved for a loan under these circumstances:

For Lonnie, a 45-year old Canadian working as a professional English instructor in Seoul, buying his own house in the city has been near the top of his bucket list.

But his plan for a dream house has been let down by local banks rejecting his applications for a credit loan. Despite his status as a full-time instructor at the Graduate School of Interpretation and Translation of Hankuk University of Foreign Studies for more than eight years, the banks have not been accommodating.

“For the first time in almost 18 years after I came here, I applied for a credit loan offered by Woori Bank last year to raise money to purchase an affordable starter home,” he said. “However, a bank clerk said I don’t qualify for the lending as my contract at HUFS was only for a year, saying foreigners could run away if they only had a one-year contract.“

His contract is renewed on a yearly basis, but he is classified as regular worker subject to the state’s employment insurance coverage. He earns an annual income of around 80 million won ($69,300). 

Korea Herald

You can read more at the link.

South Korea is really a housing bubble burst away from a major recession considering all the debt that people have tied up in their homes:

Record high household debt, including credit cards, edged closer to 1,090 trillion won ($994.3 billion) in December largely due to the central bank’s cut in the benchmark interest rate.

The Bank of Korea reported on Thursday that household debt at the end of December was 1,089 trillion won, a 2.8 percent increase from the previous record of 1,059.2 trillion won in the third quarter of 2014. When compared to the end of 2013, household debt expanded 6.6 percent from 1,021.4 trillion won.

Overall household debt has set records for seven consecutive quarters.(………………)

“The household debt to disposable income ratio, which is an indicator of households’ debt burden, at the end of 2013 was 160.7 percent, which is relatively high compared to major advanced economies, including the United States,” said Kim Yong-beom, director general of the financial policy bureau at the Financial Services Commission. “But the financial debt to financial asset ratio is holding steady at 46 percent. The government has been making persistent efforts to reform the structure of mortgage loans.”  [Joong Ang Ilbo]

You can read more at the link.