SEOUL, KOREA - As the Bank of Korea lowers the benchmark interest rate, the Ministry of Land, Infrastructure, and Transportation is also reviewing a proposal to cut loan rates for its home mortgage lending programs. Up until now, the rates offered by government-sponsored programs have not been so much different from market rates offered by commercial banks.
Do Tae-ho, the ministry's senior manager in charge of housing policy, said on May 9, "We are discussing whether to lower the rates for government programs such as that for first-time homeowners from the current level of 3.3 to 3.5 percent.
Currently, the annual rate offered by the government lending programs to those families with a household income of 60 million won or less when they purchase a home smaller than 60 square meters, or valued 300 million won or below, is 3.3 percent. For those families purchasing homes between 60 and 85 square meters, the rate is 3.5 percent. The rate offered to those intending to rent a home under "jeonse" arrangements is also 3.5 percent.
Following a 0.25-percentage-point cut in the benchmark rate, all these rates must come down at the level slightly over 3 percent. Park Hap-su, senior manager at Kookmin Bank, said, "Low-income families will be able to buy houses if government-offered rates are lower than market rates, which will also stimulate the overall real estate market."
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