Up to 4.5% Interest Rate? ... 'This' Is Definitely Worth Switching to in November [Chosun Price Records]

(38) Youth Housing Dream Subscription Account... Maximum Interest Rate 4.5%
'Anyone Can Join' Comprehensive Housing Subscription Savings Also Improved Benefits
From November, Recognized Payment Amount Raised from 100,000 KRW to 250,000 KRW

As banks begin to lower savings and deposit interest rates in response to the Bank of Korea's (BOK) base rate cut, the Youth Preferential Housing Subscription Savings Account, offering up to 4.5% interest benefits, is attracting attention. Even those who are not youths can enjoy interest rates in the 3% range, as subscription savings account benefits have been significantly improved recently.

A view of a villa-dense area in Seoul. Photo by Yonhap News Agency

NH Nonghyup Bank lowered its fixed deposit interest rates by 0.25?0.40 percentage points (p.p.) and installment savings interest rates by 0.25?0.55 p.p. starting from the 23rd of this month. The interest rates for subscription savings and installment savings for tax benefits were also reduced by 0.25 p.p. Woori Bank also cut the applied interest rate for its 'Woori First Fixed Installment Savings' (12 months) from 2.2% to 2.0%, a 0.2 p.p. decrease.

This is interpreted as an effect of the recent adjustment of the BOK base rate. On the 11th, the BOK held a monetary policy meeting and lowered the base rate by 0.25 p.p. from 3.5% to 3.25%. Following this, savings banks and regional banks first lowered their savings and deposit interest rates, and then commercial banks joined the trend of lowering deposit interest rates.

If you are a youth... 'Youth Housing Dream Subscription Savings Account'

In a situation where banks are lowering deposit interest rates, the 'Youth Housing Dream Subscription Savings Account,' which offers up to 4.5% interest, is receiving a hot response. Typically, subscription savings accounts have been evaluated as unsuitable for asset growth because their interest rates are lower than general savings and deposits. However, since the Youth Housing Dream Subscription Savings Account applies a high interest rate, it can be used in various ways not only for housing subscription opportunities but also for asset formation. As word of these benefits has spread, the number of subscribers exceeded 1.22 million as of August.

The Youth Housing Dream Subscription Savings Account is available to non-homeowners aged 19 to 34, with relaxed eligibility criteria compared to the previous Youth Preferential Subscription Savings Account (income limit raised from 36 million KRW to 50 million KRW) and increased payment limits (maximum from 500,000 KRW to 1,000,000 KRW). Especially, if the subscription period is two years or longer, a high interest rate of 4.5% applies up to a principal limit of 50 million KRW based on the non-homeownership period. Those who qualify can apply for both private and public housing.

Additionally, if selected in the subscription, one can receive a dedicated loan called the 'Youth Housing Dream Loan.' Through this loan, up to 80% of the purchase price can be financed at a low interest rate starting from 2.2% (varying by income and maturity). After the loan, additional interest benefits are available for those who marry, have children, or belong to multi-child families (additional childbirth). However, there is a time limit for new subscriptions, so caution is advised. New subscriptions, including conversions from existing subscription accounts, are possible until December 31 of next year.

Even if not a youth, subscription savings account interest rates in the 3% range

Housing subscription is a system that grants the right to apply for newly built apartments or houses to those who meet certain qualifications through subscription-related deposits. New apartment sales are conducted only through subscriptions, and joining a subscription savings account is essential to apply and qualify for winning. It is a necessary savings tool if one has set the goal of securing housing.

The photo shows a notice about housing subscription posted at a bank in downtown Seoul. Photo by Yonhap News

Subscription savings accounts consist of subscription savings and installment savings, tenant savings accounts, Housing Subscription Comprehensive Savings (Comprehensive Savings), and Youth Preferential Housing Subscription Comprehensive Savings (Youth Housing Dream Subscription Savings Account). For tenant savings accounts, depending on the subscription account type, one could only apply for either private or public housing, but by converting to comprehensive savings, one can apply without restrictions on housing types. Anyone can open one comprehensive savings account per person.

Moreover, the benefits of comprehensive savings have been improved to offer higher interest rates and income tax deduction benefits than before. If maintained for more than two years, one can receive up to 3.1% interest, which is 0.3 p.p. higher than before. Additionally, non-homeowner household heads with an annual income of 70 million KRW or less can receive an income tax deduction of up to 40% of their payment amount (up to 1.2 million KRW annually, with a limit of 3 million KRW per year). The monthly recognized payment amount will also increase. Starting from the 1st of next month, the monthly recognized payment for Housing Subscription Comprehensive Savings will rise from 100,000 KRW to 250,000 KRW. Conversion to comprehensive savings will be temporarily available for one year until September 30 of next year. Conversion at the bank where the account was held has been allowed since the 1st of this month, and transfers of subscription savings and installment savings to other banks will be implemented from the 1st of next month.

Meanwhile, some voices argue that housing subscription is ineffective. This perception has spread because winning a subscription in popular areas like Seoul is as difficult as winning the lottery, and prices have risen. However, with the monthly recognized payment raised to 250,000 KRW, the winning threshold for public housing subscriptions around 15 million KRW has been brought forward, and since holding the account longer is advantageous for increasing subscription points, it is important to utilize the subscription system according to individual circumstances. In the subscription point system, the subscription account holding period accounts for 17 points out of a total of 84 points.