Bogeumjari Loan Interest Rate Raised for Three Consecutive Months... 0.10% Point Increase Starting Next Month

Base Interest Rates by Product and Maturity for the Home Purchase Loan Program (As of November 1, 2021), Photo by Korea Housing Finance Corporation

[Asia Economy Reporter Song Seung-seop] Korea Housing Finance Corporation announced on the 26th that it will raise the interest rate of the long-term fixed-rate, installment repayment mortgage loan ‘Bogeumjari Loan’ by 0.10 percentage points in November compared to the previous month.

Accordingly, based on applications completed by the 1st of next month, the ‘u-Bogeumjari Loan’ and ‘t-Bogeumjari Loan’ will have a fixed base interest rate applied until maturity, ranging from 3.10% per annum (10 years) to 3.40% per annum (40 years). The ‘Akkim e-Bogeumjari Loan’ offers rates 0.1 percentage points lower, ranging from 3.00% per annum (10 years) to 3.30% per annum (40 years). This marks the third consecutive monthly increase following rises of 0.10 percentage points in September and 0.20 percentage points in October.

The Bogeumjari Loan is a mortgage loan product with a fixed interest rate throughout the agreed maturity period (up to 40 years). It has the advantage of allowing stable monthly principal and interest repayments even amid rising interest rates.

An official from the Korea Housing Finance Corporation explained, “Due to the rise in government bond yields and other factors, we have adjusted the Bogeumjari Loan interest rates,” adding, “If you complete your application for the Bogeumjari Loan in October, you can receive the pre-adjustment interest rate.”

There are no special restrictions for loan maturities between 10 and 30 years, but for the ultra-long 40-year maturity Bogeumjari Loan, applicants must be newlywed households where the applicant is 39 years old or younger, or within 7 years of their marriage registration date (including those planning to marry within 3 months).

The official further explained, “Generally, as the loan maturity lengthens, the monthly repayment amount decreases,” but “since interest rates increase with longer maturities, the total interest burden over the entire repayment period rises.” They added, “It is necessary to carefully decide on the use of the Bogeumjari Loan, loan amount, maturity, and repayment method, considering the applicant’s economic activities and financial situation.”