Newborn Special Loans, 3.4 Trillion Won Applied in 3 Weeks... More Refinancing than New Loans

10% of Total Budget Spent

The application amount for the newborn special loan with an annual interest rate as low as 1% exceeded 3.4 trillion won within three weeks of its launch. This means that about 10% of the total budget (32 trillion won) was used up in just three weeks.

A banner for newborn special loans is installed at the Woori Bank headquarters in Jung-gu, Seoul. / Photo by Yonhap News

The Ministry of Land, Infrastructure and Transport announced on the 21st that from the launch date of the newborn special loan on the 29th of last month until the 16th of this month, they received 13,458 loan applications totaling 3.3928 trillion won.

Among these, applications for Didimdol loans for home purchases accounted for 10,319 cases and 2.8008 trillion won, making up 83% of the total. Specifically, refinancing loan applications were 8,201 cases and 2.1339 trillion won, more than three times the amount of new loans (2,118 cases and 674.9 billion won). The Ministry of Land, Infrastructure and Transport identified that there is strong demand to switch from existing loans to the low-interest newborn special loan.

Applications for Beotimmok loans to prepare jeonse funds amounted to 3,139 cases and 584 billion won. Similarly, refinancing purposes accounted for 1,904 cases and 334.6 billion won, exceeding new loans (1,235 cases and 249.4 billion won).

Analyzing the loan execution performance, the average interest rate for the newborn special Didimdol loan was 2.41% per annum, which is 1.88 percentage points lower than the average annual interest rate of mortgage loans from commercial banks (Woori, Kookmin, Nonghyup, Shinhan, Hana). The average interest rate for jeonse loans was 2.32% per annum, 2.03 percentage points lower than commercial bank rates.

The newborn special loan is a system that provides low-interest loans for home purchase and jeonse funds to non-homeowners or one-homeowners (for refinancing loans) who have given birth to or adopted a child within two years from the application date. This year, eligible households are those with children born after January 1, 2023. Home purchase funds can be borrowed at an interest rate of 1.6% to 3.3% per annum, and jeonse funds at 1.1% to 3.0% per annum.

This content was produced with the assistance of AI translation services.