“ Prime Rate Bogeumjari Loans for Low-income Earners Grow Sharply This Year ”

- 5.2% increase year-on-year in January through February this year-

- Based on its low interest rates, firmly established as a means for low-income households to become homeowners-

The Korea Housing Finance Corporation (KHFC) announced on March 12 that the total volume of the prime rate Bogeumjari loan, which is offered to non-homeowners whose annual household income is no more than KRW 50 million, reached KRW 397.5 billion in January and February 2013, a 5.2% increase year-on-year. The share of the prime rate type out of total Bogeumjari loans is now 21.9%, a three-fold increase year-on-year from 7.6%. This indicates that the prime rate Bogeumjari loan has become a well established vehicle by which low-income non-homeowners become home owners.

Sharp growth of the prime rate type is attributable to the launch of a new product, the Prime Rate Bogeumjari Loan II, and seven interest rate reductions

Although residential real estate market transaction volume hit a record low in Korea in January this year, the volume of the prime rate Bogeumjari loan increased sharply mainly because of KHFC's consistent efforts to lower interest rates and simplify the loan application procedure.

More specifically, ① the limit on a household’s total annual income for eligibility for the Prime Rate type II was raised to KRW 50 million from KRW 25 million in January 2012, ② the interest rate became competitive as KHFC lowered the rate up to 1.1% points through seven reductions in the last year through internal efforts, ③ the number of financial institutions handling the prime rate type increased from 11 to 16, and ④ customer convenience was significantly improved through the complete overhaul of the application page at the KHFC website and the reduction in documentation requirements. It cannot be denied that KHFC has worked hard to better support low- and middle-income families in many ways.

“While the Bank of Korea lowered the benchmark rate 0.50% points through two interest rate reductions, KHFC lowered the interest rate on the Bogeumjari loans by up to 1.1% point through seven reductions in the last year to reduce the house-purchase cost for low-income non-homeowners. Going forward, we will use the cost-savings realized through system improvement and introduction of on online loan process to improve the housing welfare of low-income non-homeowners and alleviate their financing burden,” said an official at KHFC.