The land ministry has drawn up a proposal for the government-run Housing Loan Corp. to target low-income earners, ministry sources said Tuesday.
The move was made in response to a recommendation by the government's administrative reform body that the public loan company withdraw from the market as it is impeding private-sector lending services, the sources said.
Housing Loan Corp. has been increasing its market share in response to the government's call to spur the economy by encouraging consumers to build homes. The unit accounted for 38.1 percent of all fresh loans extended in fiscal 1999, up from 25.2 percent in fiscal 1991.
But commercial banks have criticized the public corporation for what they see as an attempt to hinder their lending activities.
The proposal by the Land, Infrastructure and Transport Ministry calls for a cut next fiscal year in the number of homes eligible for loans from Housing Loan Corp. There were 550,000 units budgeted for this fiscal year.
The administrative reform body's plan requires the government to suspend payments used by Housing Loan Corp. to offer low-interest loans. It also calls on the corporation to focus on buying and selling housing loan credits from commercial banks. The land ministry is arguing against such a plan, saying suspension of the interest subsidy would increase the burden on borrowers. , hitting low-income earners when interest rates rise.