HF Lowers Default Rates for Bogeumjari Loans

- The rate cut eases the financial burden on defaulting borrowers to help them get back on track

Korea Housing Finance Corporation (HF, CEO Lee Jung-Hwan) stated on April 30, 2018, that it cut the default rates for Bogeumjari Loans. The rate cut, which came in line with the government's recent measures to support vulnerable and defaulting borrowers, aims to ease the financial burden on defaulting borrowers and help them get back on their feet.

Default interests are calculated using the base interest rate plus the default rate. With the rate cut, HF lowered its default rates from the current range of 2-4%, which remains the lowest level in the banking sector, down to 2-3%.

HF is currently running various debt adjustment services, such as a reduction in penalties on delayed debt payments and a deferral in principal payments, in order to lower the burden on borrowers. It is also going to create a consultative body to coordinate default rates, which will conduct an internal review of the rationality and feasibility of its future rate decisions for stronger internal controls. 

An HF official said, “We will improve our mechanism of determining default interests in a reasonable manner, minimizing the debt burden on our defaulting customers and thereby meeting the needs of our society."