“Eight out of 10 non-homeowner households wish to buy homes in the future”

 
More than 75% of potential mortgage borrowers prefer long-term loans lasting 10 years or longer

A recent survey shows that eight out of 10 households that do not own a home are willing to buy one in the future. Over 75% of respondents with the intention to tap into mortgage loans for buying homes prefer long-term mortgages of 10 years or longer.

On the 8th, the Korea Housing Finance Corporation (KHFC, CEO Seo Jong-dae) announced the results of the "2013 Survey on the Demand for Housing Finance and Bogeumjari Loans," which was conducted from August 19th through October 18th last year on 5,000 general households nationwide and 2,000 using Bogeumjari mortgage loans.

59.6% of jeonse-based home lessors hope to maintain the system

of 495 households currently renting our their homes on a jeonse (returnable lump-sum deposit) basis, 59.6% said they wished to maintain the jeonse system because a large sum of money was needed to return the lump-sum deposit (47.9%), followed by those indicating the difficulty of maintaining monthly rentals (31.0%).

60-135m² as the most preferred unit size for home buyers and tenants

When asked which unit size they prefer the most, 88.6% of the 3,591 households willing to buy homes and 76.3% of the 2,061 interested in renting said they preferred 60-135m² (in terms of areas for exclusive use).

 For houses 60m² or smaller, only 3.1% of those surveyed hoped to buy them, while 20.9% were willing to rent them.

"Traffic conditions and distance to workplace" as the key considerations for choosing rented homes

Among those surveyed, 37% out of the 2,148 households currently living in jeonse- or monthly rent-based housing chose "traffic conditions" and  "distance to workplace" as the main reasons for choosing their current dwellings. Of prospective tenants, 30.4% also pointed them out as the most important considerations.

85.5% of homeowner households reside in their own homes

Of 2,973 home-owning households, 85.5% were found to be living in their own homes, while the other 14.5% rented them and lived elsewhere. The key reasons for homeowners to rent other houses included "traffic conditions/distance to workplace" (40.0%) and "education for children" (29.3%).

82.2% of non-owning households willing to buy homes in the future

Asked if they were willing to buy homes in the future, 82.2% of the 2,027 households without homes and 64.9% of the 2,973 with homes said they had plans to do so, hinting that non-speculative, non-owning prospective home buyers still felt the need for home ownership.

Most mortgage loan users feel they borrowed a sufficient amount of money

Among the 1,544 households subscribed to mortgage loans, 82.3% said the amount of loans extended was sufficient, showing that a majority of these households were able to borrow as much money as they wanted through mortgage loans from financial institutions.

For the future use of mortgage loans, the most adequate ratio of principal and interest repaid against monthly income, they believed, was 15.6%. The main factor that they took into account in choosing mortgage loan offerings was the level of loan interest (63.9%), followed by the type of interest (20.1%) and the maximum loan amount (6.2%).

Meanwhile, the key reasons for dissatisfaction with mortgage loans included the level of loan interest (65.9%) and the type of interest (17.5%).

76.1% of prospective mortgage loan users prefer long-term loans lasting 10 years or longer

Of the households who expressed their intention to make mortgage loans (33.2% of general households), 76.1% were found to prefer long-term mortgage loans of 10 years or longer. Compared to 65.9% five years ago, this figure indicates a sharp increase in the demand for 10-year or longer-term mortgage loans.

Fixed rate as the most popular type of interest for mortgage loans

Among the 1,643 households willing to use mortgage loans in the future, 57.5% chose fixed rate as the most preferred type of interest. Key reasons included: "The loan interest remains the same even if market interest rates go up in the future" (58.3%); "There is no need to care about fluctuating loan interest rates" (21.1%); and "The amount of principal and interest repaid can be kept constant" (20.2%).

"The survey results show that the willingness of non-owning households to buy homes remains as strong as in the past," explains one KHFC official. "Despite the sluggish housing market, non-speculative, non-owning prospective home buyers wish to buy homes, hinting that they still feel the need for home ownership."