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Definition of Housepoor: Considering Alternative Repayment Scheme and Additional Household Wealth

KIM, JUN HYUNG 1

1명지대학교

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ABSTRACT

The current definition of housepoor is based on the DTI (debt-to-income) ratio, which fails to consider alternative repayment schemes, additional household wealth and practical difficulties in analyzing the purpose of borrowing. This study proposes a new definition with the standard payback period which can account for balloon payment and spare wealth. Extracting the housepoor with the new definition, the number of housepoor is about fifty thousand, which are 0.3% of total households in Korea and 1% of total housing mortgage loans. This fact can weaken the necessity of government intervention in housepoor problems. Including other purposes of borrowing doubles the size of beneficiaries, which implies government measures should account for the purpose of borrowing. The new definition also shows that Korean housepoors are concentrated in the elderly and low-income groups. The concentration provides solid foundation that housepoor policies should be coordinated with other policies for the elderly and low-income households.

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