Some 20 Institutions to Provide Prime Rate Bogeumjari Loans

Starting in March, prime rate Bogeumjari loans that offer up to 1% of interest rate discount to non-home owners will now be provided at most financial institutions such as banks and insurance companies.

Korea Housing Finance Corporation (CEO Joo-jae Lim) announced on February 12 that all 20 financial institutions that sell the regular Bogeumjari loans will be able to provide the prime rate Bogeumjari loans from March to enable better access to the loans by low income households.

Currently, only 11 institutions deal in prime rate Bogeumjari loans: Industrial Bank of Korea, Nonghyup, Shinhan Bank, Korea Exchange Bank, SC First Bank, Hana Bank, Kyongnam Bank, Kwangju Bank, Jeju Bank, Samsung Fire & Marine Insurance and LIG Insurance.

Provided since August 2007, the prime rate Bogeumjari loan product provides up to KRW 100 million to non-home owners whose (jointly filed) annual income is less than KRW 20 million, when they buy a house less than 85㎡ in its net leasable area and KRW 300 million in its market price.

The interest rate will be differentiated into 3 grades according to the income level of the buyers; those who earn less than KRW 16 million per year can benefit from the 1% point discount compared to applicants to the regular Bogeumjari loan.

For instance, when a customer with the annual income lower than KRW 16 million obtains a loan with a maturity of 15 years, the interest rate is 5.7% as of February – 1% point lower than 6.7% of the regular Bogeumjari loan.

In the month of January, the sale of the regular Bogeumjari loan was the highest – 68%. The Interest Rate Switch Option Bogeumjari Loan accounted for 17%, in which the adjustable rate is applied for up to 1 year and then switched to a fixed rate. The e-Mortgage Loan, the 0.2% point discount product provided online only, was 11% while the Prime Rate Bogeumjari Loan for low-income households was 4%.