Housing mortgage demand surges amid worsening lending environment and rising popularity

Housing mortgage sales have surged sharply, mainly due to recent tightening of commercial bank lending conditions. As of January 2026, new housing mortgage sales reached 24.147 trillion won, the highest since November 2023.

Housing mortgages are long-term fixed-rate loans provided by the Housing Finance Corporation, valued for their stability and favored by borrowers seeking security. They can be applied for when the combined annual income of a couple is less than 70 million won and the housing price is below 600 million won. The market believes that as the cycle of benchmark rate cuts ended earlier this year and market interest rates rose, demand for housing mortgages offering relatively low interest rates increased. In fact, the yield on five-year bank bonds has risen from 3.499% at the end of December 2025 to 3.715% at the end of January 2026.

On the other hand, new housing pension contracts plummeted to 939 cases during the same period. This is the lowest since January 2025. The decline in new contracts is attributed to delayed applications for housing pensions as expectations for rising home prices failed to sustain, leading to increased reluctance to proceed. The housing price expectation index reached 124 in January 2026 but sharply dropped to 108 in February, indicating a worsening outlook for the housing market.

This trend suggests that as household loan conditions become increasingly strict, borrowers will actively seek more attractive interest rates. Additionally, greater housing price volatility makes loans for immediate funding more attractive compared to housing pensions designed for long-term stability, leading to sustained interest in such loans.