The purpose of this study is to direct the evolution of housing finance in Korea corresponding to the economic growth and the rapid change in policy environment.
The housing finance system in Korea is closely tied to the housing sector via distribution system of newly constructed housing units. Only the buyers of contractual savings deposit, who have waited a certain period, are eligible to participate in the lottery to distribute the units. Thus, its funding depends on business cycle in housing sector and the investment incentives like premium to the private sector.
However, business cycle in housing sector is in recess nowadays and anti-speculative policy is pursued. These lead the housing finance in difficulty to respond timely to the increased housing demand and to the rapidly changing environment surrounding financial market.
Financial liberalization including interest rate deregulation and capital market opening is in the process. Housing finance which has been protected by the government regulation is also affected by the financial liberalization.
Deregulation on housing finance will reduce its competitiveness in funding market, which results in shrink of the housing finance. However, capital market liberalization will give the housing finance a great opportunity to expand through the integration of housing finance to the capital market which is expanded by the inflow of foreign capital. Thus, structual revolution of housing finance in Korea is necessary in order to overcome its frictional difficulty and to utilize the opportunity to its long-term development.
In order to figure out the direction of housing finance evolution, the study reviews the international experiences including developing countries as well as developed ones. Housing finance in Korea is at the stage of developing countries which mainly finance housing loan through the direct route and the contractual savings. however, the inefficiency of government intervention and transaction cost increase as the economy grows. Thus, we need to expand the deposit financing and the mortgage bank financing as well as to innovate the contractual savings with tax incentives, which are conditional on the housing loan rather than on the housing unit distribution.
Moreover, strategies of mortgage securitization is also suggested in order to integrate the housing finance to the expanded capital market and to alleviate the liquidity risk of financial institution. However, mortgage securitization should be considered comprehensively with the housing price deregulation and housing finance liberalization.
- 금융자율화에 대응한 주택금융 활성화 방안 연구(Pursuing an efficient housing finance system in Korea under the financial liberalization)
- 윤주현; 조영하
금융자율화에 대응한 주택금융 활성화 방안 연구(Pursuing an efficient housing finance system in Korea under the financial liberalization)
|Series Title; No||국토연 / 93-12|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy
Territorial Development < General