- CEO Lim announces plans to strengthen financial support for working class customers -

The Korea Housing Finance Corporation (KHFC, CEO Joo-jae Lim) is introducing new Bogeumjari (Sweet Home) loans with lower rates to promote lending of long-term, fixed interest rates and increase financing for the working class.

“This year marks KHFC’s transformation into an integrated financial institution responsible for the housing, welfare, and life-time financing for the working class,” said Lim at a press conference held on Wednesday on the occasion of the sixth anniversary of KHFC. “Given that 92% of home equity loans are variable-rate equity loans, interest rates are bound to increase, and that means a growing financial burden for homeowners. This, in turn, can leave households deep in debt, which directly impacts the financial market. Therefore, in order to bring urgently needed stability to the housing finance market, KHFC plans to increase the supply of housing equity loans with long-term fixed rates and ease the interest rate burden for the working class. Beginning in June of this year, it will offer a new home equity loan product with a long-term, fixed interest rate that is about 0.2%p lower than the current rate. This will be done by making cost savings on Bogeumjari loans* and giving the savings back to our customers.”

* KHFC proposes cost savings by bringing back loan servicing and post-management of debentures, which had previously been consigned to financial companies.

The current e-Bogeumjari loan (with a 10-year maturity) is offered at a rate of 5.9%, which is almost equivalent to the average 5.88% (based on commercial banks’ new home equity loans in January 2010) of home equity loans with variable rates offered by commercial banks. The newly proposed KHFC loan to be launched in June of this year will likely offer an even lower rate than commercial banks’ home equity loans with variable rates, significantly lowering the interest paid by borrowers. 

“As for KHFC’s Jootaekyeonkeum (JTYK) reverse mortgage, a total of 3.2 trillion won has been loaned based on the guaranteed finance amount since the product was first introduced in 2007. It is becoming a major source of funding for seniors,” said Lim. “This year, we are planning an active campaign aimed at two goals: further promoting the use of the JTYK reverse mortgage and creating a more customer-friendly banking process. As a first step, we are working on exempting the revenue-stamp duty for JTYK borrowers. Meanwhile, we will launch a new product for seniors in July as part of our efforts to significantly boost this sector.”