Homebuyers Flock to Government Mortgages in Seoul Amid Price Fears

Fears of rising home prices are driving a surge in demand for South Korea's "Bogeumjari Loan," a government-backed mortgage program. In the first half of this year, the program saw a significant increase in applications, especially in the Seoul metropolitan area.

Despite five interest rate hikes this year, home prices in the capital region have remained volatile. This has prompted many to seek the Bogeumjari Loan, which offers long-term, fixed-rate financing at rates lower than those from commercial banks. Buyers are rushing to secure loans for homes priced under 600 million won before prices climb further.

Data from the ruling People Power Party lawmaker Shin Dong-wook's office shows that 27,032 Bogeumjari Loans were supplied in the Seoul metropolitan area in the first six months of 2023. This accounted for 48% of the total 56,218 loans issued nationwide. This is a notable increase from the second half of last year, when the metropolitan area's share was 40.9% of the total 56,685 loans.

The Bogeumjari Loan is designed for first-time homebuyers and actual residents. Borrowers must have a combined household income below 70 million won annually, with exceptions for newlyweds (85 million won), families with one child (90 million won), and those with two or more children (100 million won).