JTYK Should Support Income-Led Growth through Stronger Coverage
- Date 2018-09-06
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JTYK Should Support Income-Led Growth through Stronger Coverage
- HF should raise JTYK monthly payouts through higher guarantee fees or financial aid to help pay the fees
- More single-family home and townhouse owners should be encouraged to take out JTYK
- JTYK found to help improve seniors’ health, social interaction, and quality of life
- HF holds the ‘18 Housing Finance Seminar
Regarding the JooTaekYeonKeum (JTYK) reverse mortgage scheme, it is argued that HF should support the government’s income-led growth policy through stronger JTYK coverage, and that HF should come up with measures to increase JTYK subscriptions among single-family home and townhouse owners. Also, it is assessed that JTYK has contributed to improving various aspects of seniors’ quality of life, including their economic situation, health, and social relationships.
These opinions were presented at the ‘18 Housing Finance Seminar hosted by Korea Housing Finance Corporation (HF, CEO Lee Jung-Hwan) at the Korea Chamber of Commerce and Industry on the 6th. The seminar was held under the title “Measures to Advance JTYK for Happiness in People’s Retired Life”.
JTYK Should Support Income-Led Growth with Greater Coverage
- Guarantee fees need to be raised or financial aid from a government fund is necessary to help pay the fees
In his presentation entitled “JTYK’s Role for Income-Led Growth,” Associate Researcher Kim Jeong-Joo of the Construction and Economy Research Institute of Korea said, “For JTYK subscribers, the income replacement ratio reached about 45%, significantly higher than their non-subscribing counterparts. Households on the JTYK scheme show a higher marginal propensity to consume than those without the reverse mortgage scheme.” He also went on to say, “In this context, if HF raises JTYK’s monthly payouts and thus strengthens JTYK’s coverage, it will help drive income-led growth.” He further mentioned several ways to increase JTYK’s coverage, including ▲ maximizing the property price at the time the reverse mortgage comes to an end, ▲ lowering the JTYK rates through R-MBS issuance, and ▲ adjusting guarantee rates upwards. Mr. Kim added, “Properties used as collateral have typically been put up for auction or simply sold to recover the loans at the time the reverse mortgages come to an end. Rather than disposing of them, HF can use the properties to launch its new public rental housing business, opening new revenue streams.” Saying that it is worth trying to raise JTYK monthly payouts by increasing the guarantee fees, he stressed that if there is any difficulty in doing so, HF can consider ▲ tapping into a government fund to offer financial aid to help pay the fees or ▲ arranging other agencies to pay the fees in part or in whole in return for sharing any surplus profits made through the disposal of the properties.
HF Should Boost JTYK Subscriptions among Single-Family Home and Townhouse Owners
- Cooperation with related agencies is necessary to create a proper evaluation system
Professor Cho Man of the KDI School of Public Policy and Management gave a presentation entitled “Study on Stronger Income Protection Measures for the Elderly on the Basis of the Analysis of Overseas Cases.” In his presentation, he said, “Our nation will witness the dropping of the reverse dependency ratio faster than any other OECD member state. In this context, it will be a key policy task for our aging society to generate cash streams from housing and other properties in a stable and effective manner.” He added, “In order to help seniors generate greater income streams, HF needs to diversify its JTYK subscriber profile, which is mostly made up of apartment owners, to bring in those who own single-family homes and townhouses. To this end, HF needs to take the lead in building a proper price index for non-apartment housing units and assessing the existing property appraisal methods in partnership with other related agencies.” He also stressed, “It also must reinforce its cooperation with regional financial cooperatives and banking institutions to increase JTYK subscriptions in regions other than the Seoul metropolitan area.”
As for the common findings from overseas reverse mortgage products, he said, “Demand for reverse mortgages in other countries generally comes from low-income, poor-credit vulnerable groups, meaning that there should be a trustworthy guarantee provider because of the long-term, asymmetric loan risks involved. This guarantee provider should seek risk management measures because it is exposed to credit risks posed by housing market fluctuations.”
JTYK Helps Improve Its Subscribers’ Quality of Life
- The more seniors spend on medical services, the more likely they are to take out JTYK
Professor Kim Young-Seon of the Graduate School of Age-Friendly Studies at Kyung Hee University gave a presentation under the title “South Korea’s Economic and Social Challenges Relating to the Aging Population and Policy Tasks”. In the presentation, he said, “The social and economic features of elderly households are changing, but these changes are not reflected in the government’s policies for seniors.” He went on to say, “More elderly people want to stay in their homes as they age. This shows that it is important to draft policy measures which can help them stay in their own homes.” Introducing the results of his analysis of the changes brought by JTYK subscription to elderly households, he said, “JTYK subscribers are found to be more financially and socially satisfied than their non-subscribing counterparts and to have improved mental health after their JTYK subscription. If the JTYK scheme is built with various life care services, it will be able to develop into an aging-friendly support policy.”
Professor Yoo Seung-Dong of Sangmyung University presented the results of his study on the factors that induce senior citizens to take out the JTYK scheme based on actual data at the level of Korean households. He said, “The more households spend on medical services, the fewer children they have. And, the less willing their children are to inherit the property, the more likely they are to take out the JTYK scheme. Household level variants, such as the number of dependent family members and the amount of medical expenses, are found to significantly affect their JTYK subscription decision.”
These presentations were followed by an in-depth discussion presided over by Professor Cho Man of the KDI School of Public Policy and Management. The discussion was joined by Professor Shin Seung-Woo of Konkuk University, Chief Director Kim Gyeong-Rok of the Mirae Asset Retirement Institute, Professor Choi Hyeong-Seok of Ewha Womans University, and HF Associate Researcher Lim Byung-Kwon.
An HF official said, “We held this year’s seminar to explore and establish the new roles of JTYK as a stepping stone to the welfare and economic growth of the aging society and to discuss measures and tasks to be implemented for the development of JTYK. We hope that the various opinions presented at this seminar will be greatly helpful for policy and practice efforts to seek the future direction of JTYK development.”
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HF CEO Lee Jung-Hwan delivered his opening remarks at the ‘18 Housing Finance Seminar held at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, on the 6th.
