61% of Special Bogeumjari Used for New Home Purchases... Interest Rates Rise for Two Consecutive Months

Total Valid Application Amount of 35.4107 Trillion Won by the End of August
Nearly 90% of the Entire Budget Consumed

More than 60% of the special BoGeumJaRi supply amount operated by the Korea Housing Finance Corporation was used for purchasing new homes. As of the end of August, the total effective application amount for special BoGeumJaRi was 35.4107 trillion KRW, reaching 89.4% of this year's target supply amount (39.6 trillion KRW). Compared to July, it increased by 4.3 trillion KRW. Demand surged last month as the special BoGeumJaRi interest rates rose for two consecutive months in August and September.

According to the Korea Housing Finance Corporation on the 9th, looking at the effective application amount of the special BoGeumJaRi loan, the largest portion of funds was allocated to new home purchases. Over the past seven months, 61.1% (21.6395 trillion KRW) of the total amount was used as loan funds for home purchases. As the housing market gradually revived, the proportion and amount of new home purchases increased monthly. At the end of May, 53.6% (13.3361 trillion KRW) was used, rising to 56.4% (15.9191 trillion KRW) at the end of June, and 58.6% (18.2322 trillion KRW) at the end of July for home purchase loan funds.

From the 7th, the interest rate for the general type of the special BoGeumJaRi loan increased by 0.25 percentage points, and the preferential type rose by 0.2 percentage points. Accordingly, the interest rate for the general type, which applies to those with home prices exceeding 600 million KRW or incomes over 100 million KRW, jumped from an annual 4.40% (10 years) to 4.70% (50 years) to an annual 4.65% to 4.95%. The preferential type, which applies to those with home prices of 600 million KRW or less and incomes of 100 million KRW or less, increased from an annual 4.05% (10 years) to 4.35% (50 years) to an annual 4.25% to 4.55%.

The preferential type can be used at an interest rate of 3.45% (10 years) to 3.75% (50 years) annually if an additional preferential rate of up to 0.8 percentage points is applied (for socially disadvantaged groups, low-income youth, newlywed households, unsold homes, etc.). However, for victims of jeonse fraud, the same interest rate as before (annual 3.65% to 3.95%) will be applied to support housing stability and economic recovery.

The Financial Services Commission is raising interest rates to slow the pace of fund outflow as nearly 40 trillion KRW of special BoGeumJaRi is supplied to the market, leading to an increase in household debt. The special BoGeumJaRi loan, launched at the end of January this year, is a product that integrates the 'Safe Conversion Loan,' which allows switching from existing variable or mixed-rate mortgage loans to fixed-rate mortgage loans, and the 'Qualified Loan,' a long-term fixed-rate loan for home purchases.