Special BoGeumjari Loan Ending in January Next Year... 65% Allocated to New Housing

28.1% Used for Existing Loan Repayment
6.7% Used for Returning Rental Deposit

As of the end of January this year, 65.2% of the Special BoGeumJaRi Loan released was used for new home purchases. The Special BoGeumJaRi Loan is a fixed-rate mortgage loan policy financial product launched by the Korea Housing Finance Corporation (hereinafter referred to as KHFC).

On the 9th, KHFC announced that the effective application amount for the Special BoGeumJaRi Loan as of the end of November was 42.7 trillion won, of which 27.8518 trillion won (65.2%) was used for new home purchases. 11.9871 trillion won (28.1%) was allocated to repay existing loans. The amount used for returning rental deposits was 2.8637 trillion won (6.7%).

The Special BoGeumJaRi Loan has been identified as a major cause of the rise in household loans since its launch, mainly because the largest portion of funds was used for new home purchases. Accordingly, financial authorities took measures to eliminate the general type of the Special BoGeumJaRi Loan as part of efforts to stabilize household loans.

Starting from September 27, just before the Chuseok holiday, KHFC suspended applications for the general type of the Special BoGeumJaRi Loan for homes priced over 600 million won or for couples with a combined annual income exceeding 100 million won. Additionally, temporary two-home owners who purchase a new home on the condition of disposing of their existing home within three years were excluded from eligibility for the Special BoGeumJaRi Loan.

Instead, supply was focused solely on the preferential type product for those in difficult financial circumstances. Accordingly, since October, only the preferential type product, which applies to couples with a combined annual income of 100 million won or less and homes priced at 600 million won or less, has been operated. A KHFC official stated, "Since the restriction on applications for the general type of the Special BoGeumJaRi Loan on September 27, the effective application amount has stabilized with a monthly increase of around 1 trillion won," adding, "We will continue to supply the preferential type for low-income and genuine demand households until January next year."

Meanwhile, KHFC announced on the 29th that the interest rates for the Special BoGeumJaRi Loan will be frozen in December. The preferential type interest rates will be maintained at 4.50% per annum (10 years) to 4.80% per annum (50 years). If additional preferential rates (up to 0.8 percentage points) are applied to low-income youth, newlywed households, and socially disadvantaged groups (persons with disabilities, single-parent families), the lowest rates will be 3.70% per annum (10 years) to 4.00% per annum (50 years).