Over 200 Trillion Won in Fund Management, with No Checks or Oversight [Real Estate AtoZ]

Ministry Treats Housing and Urban Fund as Its Own Purse②
Interest Subsidy Budget Has Increased Sevenfold in Five Years, with No Recovery
Policy Inconsistencies Persist Despite Warnings About Household Debt Burden

The National Assembly has consistently raised questions about the appropriateness of the "Housing and Urban Fund Interest Subsidy Program," which has recently been cited as a factor behind the sharp surge in housing prices. From 2022 through this year, for four consecutive years, it has demanded corrective action. However, rather than implementing reforms, the Ministry of Land, Infrastructure and Transport has focused on expanding the related budget. Next year, the size of this budget will reach an all-time high.

The government has played a leading role in supplying excessive liquidity to the housing market, and is now introducing a slew of regulations, citing a sharp rise in home prices. Despite repeated warnings over the past several years that the rapid increase in household debt is placing a burden on the national economy, the message of "take out a loan to buy a home" has persisted, following the earlier "take out a loan to buy a house" policy. Policy inconsistencies are apparent, yet the governance responsible for these decisions remains unclear. There is no discernible basis for the execution of funds amounting to trillions of won. Many have pointed out that the fund should be managed with the same transparency as the National Pension Fund Committee.

Repayments to Banks: 2 Trillion Won Next Year, 3 Trillion Won in Three Years
National Assembly Budget Office Issues Fourth Consecutive Yearly Warning Over Fiscal Burden, Yet No Action Taken

This year, the interest subsidy budget was set at 1.8398 trillion won (based on the plan). In 2020, it was around 261.5 billion won, meaning it has increased more than sevenfold in five years. During the same period, the amount of direct loans from the fund through the Didimdol and Bogeumjari loan programs grew from 991.22 billion won to 1.40572 trillion won (based on the plan), underscoring the explosive growth.

This budget, which approaches 2 trillion won, is not money that is repaid by borrowers or banks. Instead, it is a one-time expenditure in which the government compensates banks for losses incurred by lending to consumers, and therefore, it is not recoverable. This is different from the principal that banks recover from Didimdol and Bogeumjari loans.

The National Assembly Budget Office has repeatedly warned that this could become a burden on national finances, stressing the need to set and operate the budget at an appropriate scale. Yet, the Ministry of Land, Infrastructure and Transport, which should be reflecting on these warnings, has instead explosively increased the budget. Next year, the interest subsidy budget will rise to 1.972 trillion won, an increase over this year. According to the government's mid-term fiscal management plan announced last year, by 2028, the interest subsidy budget will approach 3 trillion won. Since housing loans are repaid over several years, the amount that must be compensated to banks for the growing balance of Didimdol and Bogeumjari loans will also continue to rise.

There are also widespread concerns regarding the newborn special loan program introduced last year. The income threshold for this loan is set at up to 200 million won for dual-income households. Experts argue that it is inappropriate for high-income households within the top 2% to use the Housing and Urban Fund, which was established to support housing stability for ordinary citizens.

Jang Kyungseok, Senior Researcher at the National Assembly Research Service, commented, "The newborn special loan program launched last year by the Housing and Urban Fund is a product expected to require a massive amount of funding, yet it was promoted as a short-term response to current issues without any long-term fiscal outlook."

"Housing Fund Lacks Checks, Oversight, and Ex-Post Evaluation Systems"
Meeting Minutes and Key Decisions Remain Unpublished, Unlike the National Pension Fund

In order to examine how decisions regarding fund management were made, this newspaper requested the disclosure of the Fund Management Deliberation Committee’s meeting minutes. After about two months, on the 10th, we received a response stating that disclosure was not possible. The Ministry of Land, Infrastructure and Transport explained, "Since the meeting includes detailed information about fund investments, disclosure could significantly impact financial markets, so it is withheld in accordance with relevant laws."

The Fund Management Deliberation Committee oversees the overall planning and amendment of fund management, as well as the designation of trustees and decisions on product interest rates. In addition, there are five committees in total, including the Asset Management Committee, Risk Management Committee, Performance Evaluation Committee, and Alternative Investment Committee.

It is reported that each committee holds as many as ten meetings a year, or as few as three or four. However, the specific agendas and resolutions have never been disclosed. The Minister of Land, Infrastructure and Transport is responsible for the operation and management of the Housing and Urban Fund, while the Director of Housing Policy at the Ministry serves as the chair of the Fund Management Deliberation Committee, the highest decision-making body. The structure also requires consultation with the fund department of the Ministry of Economy and Finance during major decision-making processes.

A real estate listing board in Mapo, Seoul. 2025.10.16 Photo by Dongju Yoon

This lack of transparency stands in stark contrast to the National Pension Fund. The National Pension Fund operates a top-level decision-making committee, the Fund Management Committee, chaired by the Minister of Health and Welfare, with vice ministers from the Ministry of Economy and Finance, the Ministry of Employment and Labor, and other relevant ministries serving as ex officio members. In addition, external representatives from key stakeholder groups, such as employers, employees, and regional subscribers, participate as committee members. Major information, including monthly, quarterly, and annual revenue and expenditure status and stock holdings, is regularly disclosed. There are also several cases where the results of major committee meetings or key decisions are disclosed if deemed necessary.

The National Pension Fund also designates committee meeting minutes for disclosure. After a certain period, not only the list of attendees but also the content of their remarks can be reviewed by the public. In contrast, the Housing and Urban Fund, despite its massive scale exceeding 200 trillion won including liabilities, has no indicators for evaluating the basis or appropriateness of its decisions. Due to the lack of robust management, oversight, and monitoring systems, many experts interviewed for this report criticized the Ministry of Land, Infrastructure and Transport for treating the fund as a "private purse."

Senior Researcher Jang also pointed out, "Since the composition of statutory committees and the content of meetings are not disclosed to the public, there is a significant information gap between the 'principal' (the public) and the 'agent' (the Ministry of Land, Infrastructure and Transport) who manages the fund."