The Bank of Korea raised the base interest rate by 0.25 percentage points to 2.75%, marking a shift to a tightening policy for the first time in three and a half years. This decision aims to stabilize prices and curb soaring household debt. The central bank adjusts the base rate to influence the decision-making of economic agents regarding consumption, investment, and savings. While economic textbooks explain that higher interest rates lead to reduced borrowing and increased savings, real life cannot be explained by interest rates alone.
As news of the rate hike broke, some immediately calculated their loan interest, while others opened real estate apps to revisit properties they had been eyeing. Despite the increase in rates, the anxiety of thinking, 'If I don't buy now, I may never be able to' grew stronger. Concerns about rising home prices, the need to get married, the desire to have children, the instability of rental housing, and the inability to quit jobs all contribute to this anxiety.
Often, 'leverage' is labeled as reckless investment by young people. However, the current situation cannot be solely explained by greed. There is a reality that makes it difficult to leave Seoul, overshadowing the desire to live there. The fear of missing out on this last opportunity, which could result in a lifetime of being excluded from the asset ladder, drives panic buying more than the expectation of making money from rising home prices.
Of course, excessive borrowing increases risks for both individuals and the entire financial system. Given its vulnerability to interest rate fluctuations and income reductions, leveraging is not a recommended choice. Yet, young people who do not leverage feel they must give up on homeownership, leave Seoul, or postpone marriage. This raises the question: is leveraging truly a free choice or a contradiction of the system?
For previous generations, owning a home was a goal that could be achieved through hard work and saving. Life continued after purchasing a home. However, for today's youth, acquiring a home has become a project that requires risking their entire lives. They plan marriages, have children, and prepare for retirement based on the assumption of repaying loans over 30 to 40 years. A home, which should be the foundation of life, has become the ultimate goal.
Even those who have successfully leveraged their investments find their lives far from peaceful. They anxiously watch the news of rising interest rates while paying about half of their monthly salary toward principal and interest. Although they finally own a home, the life they should enjoy within that home is gradually diminishing. They cut back on spending, forgo new challenges, and even postpone small daily joys in anticipation of unforeseen expenses. This paradox sees their current lives held hostage for the sake of future housing stability.
The problem lies in the fact that all responsibility falls solely on the individual. As young people are pushed into the market by anxiety, the housing safety net has failed to absorb the market's instability adequately. When they choose to leverage in this created anxiety, they are labeled as 'speculators,' and when interest rates rise or home prices fluctuate, they are told it is 'self-inflicted.' Blaming individual failures for choices created by the system is an overly simplistic conclusion.
The central bank cannot resolve this issue solely through macroeconomic numbers by raising or lowering interest rates. More important than the direction of a 0.25 percentage point interest rate is understanding why young people feel they cannot maintain their daily lives without being tied to a lifetime of debt. As long as a home exists as a massive sum that requires a lifetime commitment to obtain, the tragic choice of 'leveraging' will inevitably recur, regardless of interest rate fluctuations.
Society must respond. Why do young people feel they cannot start their lives without buying a home? Is it truly impossible to create a society where individuals are not anxious without homeownership, where housing is not the goal of life but rather a starting point? If homes remain a qualification for life, we will continue to push more young people into debt and call it a choice.
As news of the rate hike broke, some immediately calculated their loan interest, while others opened real estate apps to revisit properties they had been eyeing. Despite the increase in rates, the anxiety of thinking, 'If I don't buy now, I may never be able to' grew stronger. Concerns about rising home prices, the need to get married, the desire to have children, the instability of rental housing, and the inability to quit jobs all contribute to this anxiety.
Often, 'leverage' is labeled as reckless investment by young people. However, the current situation cannot be solely explained by greed. There is a reality that makes it difficult to leave Seoul, overshadowing the desire to live there. The fear of missing out on this last opportunity, which could result in a lifetime of being excluded from the asset ladder, drives panic buying more than the expectation of making money from rising home prices.
Of course, excessive borrowing increases risks for both individuals and the entire financial system. Given its vulnerability to interest rate fluctuations and income reductions, leveraging is not a recommended choice. Yet, young people who do not leverage feel they must give up on homeownership, leave Seoul, or postpone marriage. This raises the question: is leveraging truly a free choice or a contradiction of the system?
For previous generations, owning a home was a goal that could be achieved through hard work and saving. Life continued after purchasing a home. However, for today's youth, acquiring a home has become a project that requires risking their entire lives. They plan marriages, have children, and prepare for retirement based on the assumption of repaying loans over 30 to 40 years. A home, which should be the foundation of life, has become the ultimate goal.
Even those who have successfully leveraged their investments find their lives far from peaceful. They anxiously watch the news of rising interest rates while paying about half of their monthly salary toward principal and interest. Although they finally own a home, the life they should enjoy within that home is gradually diminishing. They cut back on spending, forgo new challenges, and even postpone small daily joys in anticipation of unforeseen expenses. This paradox sees their current lives held hostage for the sake of future housing stability.
The problem lies in the fact that all responsibility falls solely on the individual. As young people are pushed into the market by anxiety, the housing safety net has failed to absorb the market's instability adequately. When they choose to leverage in this created anxiety, they are labeled as 'speculators,' and when interest rates rise or home prices fluctuate, they are told it is 'self-inflicted.' Blaming individual failures for choices created by the system is an overly simplistic conclusion.
The central bank cannot resolve this issue solely through macroeconomic numbers by raising or lowering interest rates. More important than the direction of a 0.25 percentage point interest rate is understanding why young people feel they cannot maintain their daily lives without being tied to a lifetime of debt. As long as a home exists as a massive sum that requires a lifetime commitment to obtain, the tragic choice of 'leveraging' will inevitably recur, regardless of interest rate fluctuations.
Society must respond. Why do young people feel they cannot start their lives without buying a home? Is it truly impossible to create a society where individuals are not anxious without homeownership, where housing is not the goal of life but rather a starting point? If homes remain a qualification for life, we will continue to push more young people into debt and call it a choice.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.