Housing Prices Under 900 Million KRW Also Eligible for 4% Range Bogeumjari Loan Interest Rates

On the 6th, 'Government-Party Council on Measures to Alleviate Financial Burden for Low-Income Vulnerable Groups'
Special BoGeumjari Loan Available Regardless of Income if Housing Price is Below 900 Million Won

[Image source=Yonhap News]

[Asia Economy Reporter Sim Nayoung] The ruling party and financial authorities will introduce a 'Special Bogeumjari Loan' with an annual interest rate in the 4% range next year. This product integrates the general-type Safe Conversion Loan and the Qualified Loan Bogeumjari Loan. On the 6th, the ruling party and government held the 'Ruling Party-Government Council on Measures to Alleviate Financial Burden for Vulnerable Low-Income Groups' at the National Assembly in Yeouido, Seoul, and finalized these details.

If the housing price is 900 million KRW or less, anyone can use the Special Bogeumjari Loan regardless of income. Currently, the Bogeumjari Loan applies to borrowers with housing prices of 600 million KRW or less and income of 70 million KRW or less, so this expands the eligibility criteria. The loan limit has also been increased from a maximum of 360 million KRW to 500 million KRW. The loan can be used equally for new purchases, refinancing, and preservation loans (mortgage loans for the purpose of returning rental deposits on collateral properties).

The ruling party and government plan to set the interest rate lower than the appropriate rate to ease the burden on actual demanders. They are considering an interest rate in the 4% range, about 1.7 to 2 percentage points lower than the current appropriate rate in the 6% range.

The council explained, "The interest rate level will be determined by considering not only the procurement interest rate level but also the need to alleviate the interest burden on low-income and actual demanders, and the status of securing funds," adding, "We will support the loan at an interest rate somewhat lower than the appropriate Bogeumjari Loan rate (estimated to be in the 6% range next year)." They also stated, "To support the loan at the current low interest rate level (in the 4% range), additional funding such as appropriate budget support is necessary."

The Financial Services Commission emphasized, "Since the applicable interest rate and eligibility may change depending on the time of loan application, it is essential to check the applicable system."

Borrowers who are eligible for this year's preferential Safe Conversion Loan may face higher loan interest rates when using the Special Bogeumjari Loan for refinancing next year. As the Bogeumjari Loan interest rate is scheduled to increase at the end of the year due to the accumulated rise in market interest rates, borrowers who need Bogeumjari Loan financing are advised to apply in advance.

The Korea Housing Finance Corporation plans to implement an interest rate increase on the 20th due to the accumulated rise in interest rates. However, the preferential Safe Conversion Loan interest rates (3.8~4.0% (3.7~3.9% for low-income and youth)) will remain unchanged until the end of this year.