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Busan Metropolitan City Secures Mortgage Principal Repayment Deferral for Parental Leave Borrowers from Private-Sector Lenders, Contributing to a More Stable Child-Rearing Environment

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Busan Metropolitan City Mayor Park Heong-joon announced that the mortgage loan principal repayment deferral program for parental leave borrowers, which the city proposed last year to ease the housing cost burden on those taking parental leave, will take effect starting this month.

During parental leave, household income often decreases temporarily, but repayment of loan principal and interest remains unchanged, increasing financial strain on families and being cited as a major factor that discourages the use of parental leave.

Previously, principal repayment deferral during leave was available only for certain major policy financing loans, while private-sector mortgage loans generally did not recognize parental leave as a reason for principal repayment deferral.

In April last year, Busan Metropolitan City proposed to the Financial Services Commission and the Korea Federation of Banks a principal repayment deferral program for parental leave borrowers with mortgage loans. In cooperation with the Presidential Committee on Ageing Society and Population Policy, the city achieved simultaneous nationwide implementation, further enhancing the program’s reach and impact.

Because each bank could decide on its own whether to recognize parental leave as a valid reason for principal repayment deferral, Busan Metropolitan City determined that a staggered rollout by banks would lower awareness and utilization of the program and therefore explored a plan for a simultaneous rollout across the entire financial sector.

Working together with the Presidential Committee on Ageing Society and Population Policy, Busan Metropolitan City underscored the need for broad, society-wide participation in addressing low birth rates and secured simultaneous nationwide implementation from banks that had been reluctant to introduce the program due to concerns about risk management burdens.

Eligible applicants can apply starting this month at their banks’ branches nationwide.

As of the application date, applicants are eligible if either the borrower or the borrower’s spouse is on parental leave. The program applies to mortgage loans for homeowners whose home value is KRW 900 million or less as of the time of application, among mortgage loans for which at least one year has passed since disbursement.

Principal repayment can be deferred for up to one year upon the initial application. If parental leave continues until the end of the deferral period, the deferral may be extended by one year at a time, up to two times. The total deferral period is limited to a maximum of three years. For details, applicants should consult their bank branch.

As the program is in its initial stage, Busan Metropolitan City plans to actively promote the program through focused outreach to residents and corporate employees and will continue efforts to encourage the use of parental leave.

Mayor Park Heong-joon stated, “Expanding this program is expected to improve households’ short-term cash flow and ease the financial burden on parents during parental leave, helping create a more stable child-rearing environment.” He added, “We will continue working to identify practical, everyday measures that businesses and residents can feel and to improve policies, doing our utmost to make Busan a happy city where work and life are balanced.”