“ KHFC Raises Interest Rate on Bogeumjari Loans by 0.2%p beginning in July ”

- Lowest rate for prime rate Bogeumjari Loan for borrowers with annual income less than KRW 50 million set at 3.0% -

The Korea Housing Finance Corporation (KHFC) announced on June 26 that the interest rate on Bogeumjari loans (long-term, fixed-rate mortgage loans) would be raised by 0.2%p on July 1. KHFC had lowered the interest rate on Bogeumjari loans 10 times since September 2010.

With the latest increase, the interest rates on regular ‘u-Bogeumjari Loan’ (for houses valued at less than KRW 900 million) with no annual income requirements will increase from the current 3.8% (10-year maturity) ~ 4.05% (30-year maturity) per annum as of the end of June 2013 to 4.0% (10-year) ~ 4.25% (30-year) per annum.

In the case of prime rate Bogeumjari loans where the government subsidizes interest for non-homeowners whose annual income is less than KRW 50 million and the house is valued at less than KRW 600 million, the interest rates on Prime Rate I (combined annual income with spouse totaling KRW 25 million or less) will be 3.0% (10-year) ~ 3.7% (20-year) per annum and Prime Rate II (combined annual income with spouse totaling more than KRW 25 million and to a maximum of KRW 50 million) is available at 3.5% (10-year)~ 3.75% (30-year) per annum.

“Despite the recent rise in the interest rates on government bonds*, we kept the rise in interest rates contained at a minimum level to reduce the interest burden on Bogeumjari loan borrowers. KHFC will continue to strive to ease the financial burden of low-income households in becoming homeowners,” said an official at KHFC.

* Interest rate on 5-year government bonds: 2.56% (as of the end of April 2013) → 3.32% (June 25, 2013)

KHFC previously lowered the interest rates on Bogeumjari loans by 0.2%p in April and froze them in May and June.