‘Super-Long-Term Public Mortgages’ as a Vehicle for Addressing Housing Inequality: A Korean Solution for Millennials

Abstract

Homeownership and housing price appreciation are often framed as the real culprits behind yawning wealth inequality, which reduces social mobility and exposes non-homeowning millennials to structural inequality. In response, governments have introduced various homeownership policies, including long-term mortgages. This paper highlights South Korea’s public mortgages with very long terms of 40 years or more as one potential vehicle for addressing housing inequality. Rather than performing an econometric analysis on a policy that will not materialize until late 2021, the paper focuses on conducting a comprehensive literature review covering various national contexts. Next, the paper discusses the economic and financial implications of Korea’s ‘super-long-term public mortgages.’ To conclude, the paper suggests several financing solutions, ranging from a more advanced mortgage-backed securities market to a national fund drawing on public wealth. Through this holistic discussion, the paper hopes to trigger a vibrant discourse on policies to address housing inequality for young adults.