The “New Baby” loan program, introduced on January 29 by the Ministry of Land, Infrastructure and Transport, had received 20,986 applications totaling 5.18 trillion won as of April 29, the ministry said. (Image courtesy of Yonhap)
SEOUL, May 6 (Korea Bizwire) – A special loan program in South Korea offering rock-bottom interest rates for newlywed couples and new parents has drawn more than 5 trillion won in applications just three months since its launch, data showed on May 5.
The “New Baby” loan program, introduced on January 29 by the Ministry of Land, Infrastructure and Transport, had received 20,986 applications totaling 5.18 trillion won as of April 29, the ministry said.
Of those, 14,648 applications worth 3.99 trillion won were for mortgages to buy homes, accounting for 77 percent of the total. Within that category, 9,397 applications valued at 2.35 trillion won were for refinancing existing loans at lower rates, outpacing new mortgage applications.
For rental home loans, new applications slightly exceeded refinancing, with 3,297 new rental loans worth 652.3 billion won compared to 3,041 refinancing loans valued at 543.3 billion won.
The heavy demand suggests the program may have contributed to a surge in Seoul apartment transactions, which topped 4,000 units in March for the first time in over two and a half years. With Seoul’s monthly rent prices rising for 50 consecutive weeks, analysts expect new mortgage applications to rise further.
The program, aimed at easing housing costs for newlyweds and new parents, offers interest rates as low as 1.1 percent for two-year loans of up to 300 million won toward rental housing deposits.
For mortgages on homes valued under 900 million won with floor areas up to 85 square meters (915 square feet), the program offers rates as low as 1.6 percent for loans up to 500 million won.
Eligibility is limited to households without existing home ownership that have given birth or adopted a child within two years of applying. Single-home owners can apply only for refinancing.
When announced last year, officials projected around 32 trillion won in loans would be issued in 2024 under the program. Some 230,000 babies were born in South Korea in 2023, with 48,000 more arrivals as of February this year.
Starting in the second half of 2024, the program’s income threshold for married couples will be raised from an annual 130 million won to 200 million won. Asset requirements will remain capped at 506 million won.
M. H. Lee (mhlee@koreabizwire.com)
