- Targeting housing in speculative areas to curb real estate speculative demand

The Korea Housing Finance Corporation (KHFC, CEO Joo-jae Lim) announced on December 1, 2009 that as of Monday, December 7, 2009, a spread would apply to certain Bogeumjari loans taken out for a home in speculative areas to put a curb on speculative real estate demand.

Considering that Bogeumjari loans are offered to low-income households, KHFC is planning to apply a spread in the range of 0.1% and 0.5% points for mortgaged housing located in a speculative area as well as on large loan amounts.

For example, Bogeumjari loan borrowers would pay a spread of 0.1 percentage point when taking out a loan for a house located in a speculative area. If the loan amount exceeds 200 million won and is 300 million won or less, or if it exceeds 300 million won, they would pay an additional 0.1 percentage point or 0.2 percentage points respectively in interest. Also, an added rate of 0.1 percentage point and 0.2 percentage points would apply if the price of the mortgaged house exceeds 400 million won and is 600 million won or less or if it exceeds 600 million won, respectively. Consequently, a borrower taking out a loan exceeding 300 million won for an apartment priced over 600 million won in a speculative area would pay 0.5 percentage points more in interest.

The spread will apply to loans taken out after Monday, December 7, 2009.

Currently, Bogeumjari loan interest rates range between 5.70% (10-year maturity) and 6.35% (30-year maturity) depending on the loan period.

< Overview of Bogeumjari Loan Spread >

(Unit : %p)

 * All applicable spreads are totaled.