The French government introduced the zero-interest mortgage, known as Prêt à Taux Zéro, or PTZ, in 1995. The state covers the interest instead, with the aim of easing the burden on first-time homebuyers.
But the fiscal cost has climbed sharply, contributing to France's chronic budget deficits and rising national debt. Experts say South Korea also needs to urgently shore up its fiscal health, as demands for a "basic income"-style universal finance scheme continue on top of the government's cash-handout policies.
Tax credits tied to the PTZ are expected to cost 903 million euros (about 1.34 trillion won) this year, according to the French government's 2027 tax policy assessment report released on the 23rd. That is a 29.6% increase from last year. The figure is projected to reach 1.209 billion euros next year.
The PTZ was created to help low- and middle-income households buy their own homes. The government provides tax credits over five years to banks that extend the loans, compensating them for the interest they forgo. Eligibility is limited to people who have not owned a home they lived in over the past two years. The loans carry a 0% interest rate and a maturity of up to 25 years.
The problem is the fiscal burden. Even French politicians have questioned whether the state should be covering interest payments for every household. France's 10-year government bond yield briefly rose to 5.14% on the 22nd, its highest level in more than 24 years. Yeom Myung-bae, an emeritus professor of economics at Chungnam National University, said France's fiscal crisis is the result of spending too much of its fiscal capacity on welfare, particularly pension outlays.