Newborn Special Cases Focus More on 'Refinancing Loans' Than Home Purchases
by Sim NaYoung
Published 06 Feb.2024 10:47(KST)
9,600 Applications in One Week, 2.5 Trillion Won Requested
Contributing to Alleviating Housing Cost Burden
The Ministry of Land, Infrastructure and Transport announced that since launching the newborn special loan on the 29th of last month, a total of 9,631 applications amounting to 2.4765 trillion KRW were received within just one week until the 4th. Among all applications, Didimdol purchase loans accounted for 7,588 cases totaling 2.0945 trillion KRW, and Beotimmok jeonse (lease deposit) loans accounted for 2,043 cases totaling 382 billion KRW, indicating higher demand for purchase funds.
Among the Didimdol loans, refinancing purposes accounted for 6,069 cases worth 1.6061 trillion KRW, while new home purchases accounted for 1,519 cases worth 488.4 billion KRW. It was identified that there is significant demand to convert existing loans into low-interest newborn special loans to ease interest burdens. For Beotimmok loans, refinancing purposes were 1,253 cases worth 221.2 billion KRW, and new home rental purposes were 790 cases worth 160.8 billion KRW, showing strong refinancing demand as well.
On the first day of launch, January 29, there was some waiting time as applicants who had been waiting for the newborn special loan since last year applied all at once. However, from January 30 onward, loan applications have been processed smoothly without waiting. The loan amounts will be finalized after asset and income assessments, and the actual loan disbursement amount may differ from the initially applied amount depending on the review results. The Ministry plans to conduct thorough assessments without delay, matching the disbursement of loan funds to the borrowers’ timing of fund needs, thereby alleviating housing cost burdens for families with newborns who have real demand.
The newborn special loan product was created to overcome the low birthrate issue. The Ministry is allocating 26.6 trillion KRW for the newborn special loan fund. When purchasing a home priced at 900 million KRW or less, an interest rate of 1.6% to 3.3% per annum will be applied. However, interest rates vary based on income, with 85 million KRW as the reference point.
For jeonse deposit loans, an interest rate of 1.1% to 3.0% per annum applies to homes with deposits up to 500 million KRW in the metropolitan area and 400 million KRW in other regions. Similarly, interest rates vary based on income, with 75 million KRW as the reference point.
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