Senior＇s JTYK subscription rises significantly

Seniors＇willingness to subscribe to JTYK government-guaranteed reverse mortgage program was shown to have risen significantly. The subscription rate is continuously on the rise against a fall in application withdrawals.

On January 26, 2011, the Korea Housing Finance Corporation (KHFC, CEO Joo-jae Lim) announced that a total of 2,532 JTYK applications were received out of 2,777 cases of consultation registered (91%) in 2010. Of these, 2,016 cases, or 72.6%, resulted in new subscriptions, while 93 cases, or 3.3%, resulted in withdrawals of application by seniors.

In the previous year (2009), there were 1,720 cases of consultation registration, of which 1,462 cases (85%) were applied for, 1,124 cases (65.3%) were subscribed, and 89 applications (5.2%) were withdrawn. Thus, the subscription rate rose by 7.3%p while the withdrawal rate went down by 1.9%p year-on-year.

* Change in subscription rate (New subscription/Consultation registration*100):

2008 (50.9%) → 2009 (65.3%) → 2010 (72.6%)

* Change in withdrawal rate (Withdrawal of application/Consultation registration*100):

2008 (16.3%) → 2009 (5.2%) → 2010 (3.3%)

The change seems to reflect a stronger willingness among seniors to monetize their home instead of leaving it to their children, especially among those who have not prepared for their old age due to family support and education of their children and who cannot expect financial support from their children.

 "We expect a greater demand for JTYK consultation past the lunar New Year, when seniors have the time to talk with their family members, and after the cold winter days retire and seniors engage in more activities outside," said a KHFC official.

Meanwhile, an analysis of JTYK subscription of 2010 showed that, at 72 (for couples, based on the younger age), the average subscription age remained at the same level as in the previous year, but one year down from the average of 73 since the JTYK reverse mortgage program was first introduced.

As to the composition of subscribers, 59.4 percent (1,197 cases) were couple households. This was followed by single-female households at 32.4 percent (654 cases) and single-male households at 8.2 percent (165 cases), showing that there are four times more single-female households than single-male households.

In terms of pension payment, 60.4 percent (1,217 cases) opted for the tenure payment program where a fixed amount is paid out each month without any lump-sum payment. This figure is 21%p higher than the mixed tenure payment program where lump-sum withdrawals are allowed within a certain limit, revealing seniors＇ preference for periodic monthly payments to cover their living expenses.

The monthly payment received by subscribers averaged KRW1.074 million, similar to the average received in the previous year (KRW1.072 million) but slightly more than the average payment since JTYK was introduced (KRW1.046).

The average price of mortgage put up as collateral was KRW287 million, down from KRW295 million in the previous year but up from the average of KRW279 million since JTYK was introduced.

By region, the share of non-metropolitan regions was 23.3 percent, up 1.9%p from last year (21.4 percent); the share of the Seoul metropolitan area (Seoul, Gyeonggi, Incheon) went down slightly to 76.7 percent.

In terms of reason for subscribing, 66.5 percent decided to take out the loan based on newspaper or TV report (1,341 cases), 19 percent by KHFC promotion (385 cases), 7 percent by solicitation from a financial institution (142 cases), 3.5 percent by a subscriber＇s recommendation (71 cases), and 1.2 percent by recommendation from a senior related organization (24 cases). It was shown that an increasing number of subscriptions are based on face-to-face consultation and recommendation by existing subscriber.