“ Prime Rate Bogeumjari Loan by KHFC Emerges as a Leading Product Enabling Low-income Households

to Become Homeowners ”

- Volume of the prime rate Bogeumjari loans in the first quarter increases 3.5 times year-on-year -

The volume of new Bogeumjari loans (a long-term, fixed-rate mortgage loan for low-income non-homeowners) extended in the first quarter of 2013 increased 1.5 times year-on-year. The volume of prime rate Bogeumjari loans, offered to households with annual income less than KRW 50 million, increased 3.5 times during the same period.

The Korea Housing Finance Corporation (KHFC) announced on April 8 that the volume of the prime rate Bogeumjari loans newly extended in the first quarter of this year (KRW 728.4 billion) increased 3.5 times compared to the same period of the previous year (KRW 206.2 billion) despite the slowdown in the residential real estate market early this year. This indicates that the prime rate Bogeumjari loan has firmly established as a leading financial product that helps low-income households finance their home purchases.

“The volume of the prime rate Bogeumjari loans increased as a result of the raising of the income ceiling for eligible borrowers from KRW 25 million to KW 50 million last year, the widening of the scope of eligible houses, and the significant increase in the loan limit. Public awareness of the product has improved dramatically as well,” said an official at KHFC.

* Income ceiling raised (KRW 45 million→50 million), house price ceiling raised (KRW 300 million→KRW 600 million), loan limit raised (KRW 100 million→KRW 200 million)

The total volume of Bogeumjari loans extended in the first quarter of 2013 was KRW 2.9123 trillion, an increase of KRW 927.6 billion from KRW 1.9847 trillion in the first quarter of 2012. This may be attributable to the competitive interest rate on long-term, fixed-rate Bogeumjari loans, which are comparable to short-term floating-rate mortgage products offered by banks. KHFC lowered the interest rate by 1.3% points over eight interest rate reductions since early last year.

By product type, the regular type, in which the basic rate is guaranteed for 10~30 years, accounted for 75%, while the prime rate type, where the government subsidy is offered for low-income households on interest, accounted for 25%. Regarding the type of loan applications, u-Bogeumjari loans, which are 100 percent web-enabled and have interest rate 0.4% points lower, accounted for 96.2% (KRW 2.8008 trillion) of all Bogeumjari loans extended.

“With the 'Comprehensive Measures on Housing Market Normalization to Stabilize the Housing Welfare of Low- and Middle-income Households' announced by the government on April 1, demand for the Bogeumjari loans is expected to grow steadily in the future,” said an official at KHFC.