President-elect Park Geun-hye, who won the election in late December stumping on a platform of "economic democratization," is promising relief when she assumes office in February.
On Tuesday, her transition team - a group of experts appointed to brainstorm policies for the incoming administration - discussed plans for helping the "house poor" with the country's financial regulator, the Financial Services Commission (FSC).
As early as this month, the FSC will reportedly send a bill to the National Assembly that will allow banks to sell "covered bonds." The devices look like the mortgage-backed securities infamous for their role in the 2007 housing debacle in the US.
But there's one big difference: if a homeowner defaults, the bank takes a loss, and bondholders can recover damages if the bank also defaults on its bonds. The solution only accounts for mortgages, which make up two-fifths of household debts.
Peter Cheung, deputy spokesman for the FSC, couldn't confirm the details of the transition team briefing, saying the information has not officially been made public. But the commission says that even though low-income and elderly borrowers are feeling the most pain, the debt issue is "manageable."
Not everyone agrees that the incoming administration should intervene.
"This is a market problem. Households that borrowed should be responsible for repaying, and taxpayer money should be put to a productive use," said Cho Dong-chul, an economist at the Korean Development Institute, a government-founded but autonomous think-tank.
He added that unlike in North America, where the banking sector took a hit from the crisis, the burden of defaults in South Korea would fall more on homeowners themselves. But there's good news: the default rate on mortgages is less than 1 percent, partially because the average South Korean household has assets worth six times more than its debts.
"No one knows for sure whether it's a bubble before it actually collapses," Cho said. It's an uncertainty that gnaws at students like Kim who, despite their academic cachet and English fluency, are uneasy about putting off plans for marriage and travel - at least, should the warnings turn out pertinent.
