An Analysis of Determining Factors for Re-subscription after Early Termination of JooTaekYeonKeum

Abstract

Amid the ultra-low birth rate and rapid aging population, the role and importance of the JooTaekYeonKeum in driving the improvement of retirement income and housing stability using housing is growing, but there are a number of cases of re-subscription after termination, with limited definitiveness. Therefore, this study analyzed the impact on re-subscription after early termination of JooTaekYeonKeum, targeting 6,200 actual cases of JooTaekYeonKeum handled by 12 domestic financial institutions. In addition, a multilateral analysis was conducted by categorizing the location characteristics of the JooTaekYeonKeum collateral (metropolitan and non-metropolitan areas), institutional characteristics of re-subscription of JooTaekYeonKeum (whether re-subscription is restricted), and characteristics of the relative age group (low and high). The main analysis results show that in the case of the housing price change rate variable, it was an important factor that had a positive (+) effect on re-subscription despite the age and collateral location classification. According to the equity theory of termination, the cost of re-subscription was excessive when the LTV was high, and the utility was small, which had a negative (-) effect on re-subscription. Re-subscription measures introduced to prevent adverse selection and to improve soundness were found to have actual policy effects, but there were limitations in controlling fluctuations in age and housing prices. Based on the results of the analysis, policy implications were suggested that elaborate estimation of the rate of change in house prices, fair and equitable calculation of collateral value between regions, and reinforcement of marketability free from institutional hurdles were suggested in calculating JooTaekYeonKeum(reverse mortgage) accounting model.