Buyers Consider Fixed-Rate Loans but Choose Floating-Rate Loans

According to the results of 2008 Housing Finance and Bogeumjari Loan Demand Survey released on November 30, 69.8% of households that plan to take out loans to buy houses prefer fixed-rate loans. The survey was conducted by KHFC on 4,500 households throughout Korea from June through August this year. However, contrary to their initial plans, 91.0% of home buyers actually took out floating-rate loans.

This implies that although potential users of housing finance agree on the stability of fixed-rate loans, they first consider the higher interest rate rather than future risks at the time of borrowing and choose a floating-rate product, which offers a relatively low interest rate.

When selecting a housing loan product, 67.7% of households stated that the interest rate was the most important factor in their decision. Only 25.7% cited the type of rate (fixed or floating) as the most important consideration. Due to the rise in interest rates, 33.1% of households that had taken out loans to purchase houses have paid back their loans in advance or are planning to pay them back earlier than scheduled.

A total of 36.3% of households answered that they were satisfied with their loans. In a survey of 2,000 Bogeumjari Loan users, the satisfaction rate was high at 82.7%, much higher than last year's 46.3%, mainly because the rising interest rates highlighted the benefits and price competitiveness of the Bogeumjari Loan, a fixed-rated loan product.