7.57 Billion KRW in Q1 This Year
January 0 KRW → March 607 Million KRW
As cases of tenants being unable to receive their jeonse deposit refunds due to reverse jeonse increase, the scale of jeonse deposit refund loans guaranteed by the Korea Housing Finance Corporation (KHFC) is also rapidly growing this year. These loans have a limit of up to 50 million KRW, and the increase indicates that more landlords are using them because general bank loans alone cannot cover the decline in jeonse deposits.
According to KHFC on the 11th, the amount of rental deposit refund loans in the first quarter of this year (January to March) was 757 million KRW (16 cases). There were no cases in January, but the amount quickly increased to 150 million KRW (3 cases) in February and 607 million KRW (13 cases) in March.
The rental deposit refund loan is a product that allows landlords to borrow money from banks using a KHFC guarantee certificate as collateral to return the jeonse deposit to tenants. It is offered by Industrial Bank of Korea, KB Kookmin Bank, Hana Bank, Suhyup Bank, and Gwangju Bank, with a loan limit of 50 million KRW per house (100 million KRW for Industrial Bank of Korea). Since an additional guarantee fee rate of 0.5% to 0.6% applies, the interest rate is higher than that of mortgage loans but lower than that of personal credit loans.
The increase in rental deposit refund loans means that more landlords are borrowing money to repay the decline in deposits. For example, if the deposit falls from 100 million KRW to 80 million KRW, the landlord borrows 20 million KRW to return to the current tenant. If the landlord cannot find the next tenant and must borrow the full deposit amount, they can consider this product after obtaining a mortgage loan from a commercial bank conditional on the tenant's departure.
A representative from a commercial bank handling this loan product explained, “Although the loan scale itself is not large yet, it seems that more landlords are seeking it as it becomes better known.”
In addition, the scale of loans for the purpose of returning jeonse deposits is also on the rise. As of the first quarter of this year, the outstanding balance of jeonse move-out loans at the four major commercial banks (KB Kookmin, Shinhan, Woori, and Hana Bank) was 16.6601 trillion KRW, an increase of 1.0535 trillion KRW (6.8%) compared to the same period last year (15.5481 trillion KRW), and 5.26 trillion KRW (46.3%) compared to two years ago. Regarding the Special Bogeumjari Loan, as of the end of last month, the amount borrowed for the purpose of returning jeonse deposits reached 2.621 trillion KRW (10,761 cases).
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