As the government tightens real estate lending and market interest rates rise, demand for loans is flocking to the Bogeumjari loan. Some say supply needs to be controlled because policy loans could act as a factor pushing up real estate prices in the greater Seoul area. Korea Housing Finance Corporation (HF), which handles Bogeumjari loans, plans to review the need for institutional improvements through a fact-finding survey.
According to the financial sector on the 1st, Korea Housing Finance Corporation (HF) will soon launch a fact-finding survey of 2,000 households among borrowers who used Bogeumjari loans for one year starting in May last year. Korea Housing Finance Corporation (HF) plans to use the results of this survey for institutional improvements and policy decisions.
Korea Housing Finance Corporation (HF) conducts a fact-finding survey every year on dwellings finance such as Bogeumjari loans. This year, as there are warnings that policy loans such as Bogeumjari could serve as a household loan tinderbox, it is expected to closely review ways to improve the system. Korea Housing Finance Corporation (HF) plans to use the survey results and statistics as basic data for improving related systems and making policy decisions. The financial authorities are also said to be weighing ways to moderate the pace of Bogeumjari loans.
Bogeumjari loans are a policy finance product available when a borrower with a combined spousal annual income of 70 million won or less (up to 100 million won for newlyweds, etc.) purchases dwellings priced at 600 million won or less. Borrowers can take out up to 360 million won (400 million won for multi-child households, etc.) at a fixed rate for 50 years.
According to Korea Housing Finance Corporation (HF), Bogeumjari loan sales in the first quarter this year were about 7.4 trillion won, nearly double the same period a year earlier (about 3.7 trillion won). This is the largest quarterly figure since the fourth quarter of 2023 (8.4 trillion won). Korea Housing Finance Corporation (HF) plans to supply 20 trillion won in Bogeumjari loans this year, and it reached 40% of the target in just three months.
The reason for the rush into Bogeumjari loans is their relatively low interest rates. As of Apr. 29, the five major banks—KB Kookmin, Shinhan, Hana, Woori and NH Nonghyup—offered 5-year fixed mortgage loan rates of 4.26% to 7.10% annually, while the "Ahkime-Bogeumjari Loan" rates were 4.60% (10 years) to 4.90% (50 years) annually.
The market points out that the increase in policy loans is acting as a factor driving up real estate prices in the greater Seoul area. It is estimated that a significant number of borrowers who took out Bogeumjari loans bought dwellings on the outskirts of Seoul or in Gyeonggi Province.
A real estate industry source said, "Young generations pushed out of Seoul are moving to buy dwellings in Gyeonggi areas such as Seongnam, Gwangmyeong and Yongin. Policy loans like Bogeumjari appear to have influenced the rise in dwellings prices in these areas."