- 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.