Samsung Electronics decided to limit the dwellings eligible for its in-house housing loan program for employees without homes to those with a net floor area of 85 square meters (the standard national size) or less in the greater Seoul area and six metropolitan cities. The move reflects concerns that large, low-interest in-house loans could bypass government lending curbs and fuel home price increases.
According to the industry on the 5th, Samsung Electronics has drawn up a plan to limit the target dwellings of its in-house housing stability support loan program to dwellings of 85 square meters or less in net area in the greater Seoul area and six metropolitan cities. The company plans to implement the program this month after concluding consultations on details with the Samsung Electronics chapter of the supra-enterprise labor union, the largest union.
In May, Samsung Electronics, through labor-management agreement, introduced a housing loan program for employees without homes with an annual interest rate of 1.5% and a maximum size of 500 million won. At the time, labor and management agreed that the company would set detailed operating standards such as the support amount, eligibility, and timing of implementation, and the supra-enterprise union also agreed to accept this new area restriction plan.
Instead, the company is reportedly reviewing a plan to abolish the previously rank-differentiated loan limit and unify the maximum loan limit for all eligible employees at 500 million won.
Samsung Display, which earlier introduced an in-house housing loan program under the same conditions, also decided, after a union member vote held from the 1st to the 3rd, to support loans only for dwellings of 85 square meters or less in net area in the greater Seoul area and metropolitan cities.
The new area cap is seen as reflecting concerns that in-house loans could clash with the financial authorities' household loans management stance. In-house loans provided by corporations are classified as welfare-purpose personal lending and are not subject to financial-sector loan regulations such as the debt service ratio (DSR).
In the industry, projections have suggested that as much as 3.66 trillion won could flow into the real estate market when combining Samsung Electronics' performance bonuses of about 760 billion won and in-house loan limits of about 2.9 trillion won. As a result, criticism has continued that in-house loans, which sit in a regulatory blind spot, could stoke overheating in the greater Seoul dwellings market.