Loan Interest Rates Adjusted for Housing and Urban Fund
Didimdol and Buteemok Loan Rates to Rise in Seoul Metropolitan Area
Preferential Rate Cap Introduced; Youth Housing Dream Loan Launches Next Month
The Ministry of Land, Infrastructure and Transport announced on the 23rd that it will adjust the interest rates on purchase funds (Didimdol) and jeonse funds (Buteemok) loans from the Housing and Urban Fund for loan applications submitted after March 24 this year.
Didimdol and Buteemok loans are policy loans available to low-income households without homes, and their interest rates must be within 1 percentage point of market rates. The Ministry explained that the interest rate gap has widened significantly over the past two to three years, prompting this adjustment. This is the first policy loan interest rate increase in seven months since August last year.
With this adjustment, the Didimdol loan interest rate in the Seoul metropolitan area will rise from 2.65?3.95% per annum to 2.85?4.15%. The loan interest rate in provincial areas will remain at 2.65?3.95% per annum. For purchases of unsold houses in provincial areas, the Didimdol loan interest rate will be reduced by 0.2 percentage points.
The interest rate for newlywed couple exclusive housing purchase loans will also increase by 0.2 percentage points only in the Seoul metropolitan area, from the existing 2.35?3.65% to 2.55?3.85%. The special Didimdol loan interest rate for newborns in the metropolitan area will be adjusted from 1.6?4.3% per annum to 1.8?4.5%.
The Buteemok loan interest rate for jeonse funds, which is lent to homebuyers without homes whose combined annual income is below 50 million KRW, will also be adjusted only in the metropolitan area, increasing by 0.2 percentage points to 2.5?3.5% per annum.
Along with this, the Ministry of Land, Infrastructure and Transport decided to cap the preferential interest rates on policy loans at a maximum of 0.5 percentage points. The application period will also be limited to 4 to 5 years. Currently, applying multiple preferential rates simultaneously can reduce the loan interest rate by more than 1 percentage point.
In addition to the existing fixed maturity, 5-year interval variable, and purely variable interest rates, a mixed interest rate (fixed for 10 years then variable) will be newly introduced. The applied interest rates will also vary depending on the interest rate type.
At the end of next month, the Youth Housing Dream Loan is planned to be launched. This product is linked to the Youth Housing Dream Subscription Account introduced in February last year, allowing homebuyers aged 20 to 39 without homes who win the subscription through this account to borrow up to 80% of the sale price at a low interest rate starting from 2.2% per annum.
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