KHFC signs an agreement with Jeonbuk Bank on Conforming Loans

- Conforming Loans to be issued by all commercial banks starting early next year

The Korea Housing Finance Corporation (KHFC, President & CEO Seo, Jong-dae) said on Dec. 13 that it signed an agreement with Jeonbuk Bank (CEO Kim, Han) regarding Conforming Loans, which will be issued beginning early next year. With this agreement, all the commercial banks in Korea will issue Conforming Loans to customers beginning early next year.

※ Conforming Loans refer to lending issued to those willing to buy their own houses and meet certain pre-set conditions so that the loans are suitable for securitization. They provide financial institutions with resources for financing long-term fixed-rate mortgage loans. The product naming and interest rates of the loans for sale are left up to individual banks, and the loans are purchased and securitized by securitization institutions in the form of MBS, etc.

An official with KHFC stated, “Conforming Loans are contributing to changing the structure of Korea’s mortgage loan market, which is heavily dependent on short-term floating-rate loans, by increasing the share of long-term fixed-rate loans,” adding that “Starting next year, Conforming Loans will be available at all the commercial banks in the country, which will help customers more easily access long-term fixed-rate mortgages and stabilize household debt.”

Jeju Bank, which entered into a similar agreement earlier this month, will also begin releasing Conforming Loans early next year once the bank makes the necessary changes to its computer system.