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Korea Housing Finance Corporation '2025 Business Report'
Bogeumjari Loan Prepayment Penalty to Be Lowered... Criteria for Multiple Children Also Eased
More Exceptions to Housing Pension Residence Requirement... Expanded Uses for Withdrawals

Korea Housing Finance Corporation (KHFC) is planning to expand the monthly payment amounts for non-metropolitan subscribers to revitalize the Housing Pension program. It also plans to broaden the exceptions to the actual residence requirement. Additionally, KHFC is considering incorporating life expectancy and housing price growth rates into the interest rate calculation method.

According to the office of Kim Jae-seop, a member of the People Power Party, KHFC recently submitted the '2025 Business Plan' containing these details to the Financial Services Commission.

The target supply amount for the Housing Pension this year is set at 22.9 trillion KRW, which is 10% lower than last year's target of 25.5 trillion KRW. Last year's actual performance is estimated at 20.1 trillion KRW by the end of the year, falling short of the target.

This year, the Housing Pension project focuses on expanding subscribers and enhancing services. First, KHFC is reviewing plans to increase the monthly payment amounts for non-metropolitan subscribers by utilizing local government funds. This is in response to criticism that Housing Pension subscribers and benefits are concentrated in the metropolitan area. According to KHFC, as of July last year, 67.6% of Housing Pension subscribers were in the metropolitan area. The monthly payment in Seoul was 2,247,000 KRW, more than twice the non-metropolitan average of 1,031,000 KRW.

The actual residence requirement and interest rate calculation method, which have discouraged some from subscribing to the Housing Pension, will also be revised. Currently, to subscribe to the Housing Pension, either the homeowner or their spouse must actually reside in the house provided as collateral. Exceptions to the actual residence requirement are only recognized in unavoidable situations such as hospitalization for medical treatment or moving to senior welfare housing. KHFC plans to relax these conditions and increase the reasons for exceptions. Furthermore, KHFC is reviewing improvements to the loan interest rate system that consider changes in life expectancy and housing price growth rates.

The use of individual withdrawal funds from the Housing Pension will be expanded to cover repayment of loans for small business owners and contributions for redevelopment and reconstruction projects. Currently, usage is limited to retirement living expenses such as medical costs, ceremonial expenses, and housing-related taxes.

The target supply amount for policy financial products such as the Bogeumjari Loan is set at 23 trillion KRW. This is double last year's supply target of 10 trillion KRW and more than 3.5 times last year's estimated actual supply of 6.1 trillion KRW.

Additionally, the Financial Services Commission's plan to revise the prepayment penalty rate will be applied to the Bogeumjari Loan. Currently, the prepayment penalty rate for the Bogeumjari Loan is 0.7%, but it is expected to be lowered to around 0.5%, which is the level of commercial banks. The criteria for preferential interest rates and loan limits for the Bogeumjari Loan will also be relaxed from three or more children to two or more children within this year.

Other contents include plans to review new housing finance products that can reduce housing costs for actual homebuyers and align with the government's household debt management policy.