Variable rate on Interest Rate Switch Option Bogeumjari loans will be slashed by as much as 0.5%p
- Date 2010-03-31
- Views 1,462
- Initial rates as low as 4.3% - Restricted to new loans
taken out on or after Monday, April 5, 2010 -
On March 31, 2010, the Housing Finance (KHFC, CEO Joo-jae Lim)
announced a drastic cut in the variable rate spread of its Bogeumjari loans
with an interest rate switch option as part of its efforts to ease the
financial burden on low-income borrowers. The interest rate reduction is 0.50%p for rates pegged to
the CD rate and 0.41%p for rates pegged to COFIX.
The Bogeumjari loan with an interest rate
switch option is a mixed interest rate scheme. During the initial variable
interest rate period, the loan is applied at a variable rate pegged to the CD
or COFIX. However, borrowers have the option of switching to a fixed interest
rate whenever they wish until expiration of the initial variable rate period,
at which time the loan automatically shifts to a fixed rate.
The initial rate when a borrower applies for
the loan at a bank is around 4.7% (as of March 30, 2010). A discount of 0.2%p
applies when applying online through www.e-mortgage.co.kr. In addition,
borrowers who take the interest rate discount option can also gain up to 0.2%p in additional discounts, meaning that the initial variable
rate may be as low as 4.3
In view of increasing the support for
low-income homebuyers, KHFC will extend the initial variable rate period of the
Bogeumjari loan with an interest rate switch option from one year to three
years. This is a temporary extension, which will end when the loan program
reaches the 1.5 trillion won mark.
The interest rate discount and the extension
of the variable rate application period apply to new loans taken on or after
Monday, April 5, 2010. This loan scheme is available for purchase at 13
financial institutions (Gyeongnam, KB, IBK, Nonghyup, Daegu, Busan, Samsung
Life Insurance, Shinhan, Citi, KEB, Woori, Hana, and SC First). Online sales
begin on April 5 at Hana Bank and on April 12 at IBK, Shinhan, KEB, and Woori
banks. As soon as the necessary IT facilities are in place, KHFC will expand the
number of financial institutions offering the loan.