Upcoming Launch of Youth Housing Dream Loan and Adjustment of Housing and Urban Fund Purchase and Jeonse Funding Loan Rates
The Ministry of Land, Infrastructure and Transport announced adjustments to the loan interest rates of the Housing and Urban Fund and the new launch of the Youth Housing Dream Loan. This interest rate adjustment will be differentiated based on regional market conditions, and additional interest rate reduction benefits will be provided for purchasing unsold homes in the provinces.
Additionally, the Youth Housing Dream Loan is introduced to reduce the housing burden on young people, featuring a mixed loan structure that offers consumers more choices.
Adjustment of Housing and Urban Fund Purchase and Jeonse Funding Loan Rates
The Housing and Urban Fund loans, namely Ddimumdol and Butimok loans, are low-interest loan products designed to help low-income individuals without homes achieve housing stability. However, due to significant reductions in interest rates compared to the market over the past 2-3 years, there is a need to consider the stability of fund management.
As a result, the fund loan interest rate will increase by 0.2 percentage points, with some regions exempt from the rate hike based on local market conditions. Additionally, additional interest rate reduction benefits will be provided for purchasing unsold homes in the provinces.
Nonetheless, it is not expected to significantly help resolve the issue of unsold homes in the provinces. This becomes clearer when considering the overall situation of the housing market.
📌 Key Reform Details
The current reform involves an adjustment in the base interest rate. A slight increase of 0.2 percentage points has been implemented to ease the burden, which is excluded from application in the provinces.
Additionally, when purchasing unsold homes in the provinces, an additional interest reduction of 0.2 percentage points has been established. Such measures are expected to provide more favorable conditions for home buyers.
Upper limits and periods for preferential interest rates have also been set. The maximum preferential rate will be limited to 0.5 percentage points, with the applicable period set between 4 to 5 years.
The loan interest rate structure will also be reformed. Fixed-rate loans will have an additional 0.3 percentage points, mixed loans will increase by 0.2 percentage points, and 5-year variable loans will rise by 0.1 percentage points.
This interest rate reform will take effect for applications submitted from March 24, 2025, onward. These changes are expected to have a significant impact on the financial market.
Launch of Youth Housing Dream Loan – Scheduled for Late March
A new loan product for the housing stability of young people is being launched: the 'Youth Housing Dream Loan.' This loan supports young people who have subscribed to the Youth Housing Dream Savings Account in securing the balance of newly purchased housing, offered at a minimum interest rate of 2.2%.
The loan is aimed at individuals aged 20 to 39 who are winners in the subscription lottery among subscribers of the Youth Housing Dream Savings Account, with an income of 70 million won or less (or 100 million won or less for newlyweds). Additionally, their net assets must be below 488 million won and can vary annually, with at least one year having passed since subscribing to the savings account and a payment record of more than 10 million won.
As for loan conditions, the target housing must cost 600 million won or less, with a usable area limited to 85㎡ (100㎡ for towns and rural areas excluding cities). The maximum loan limit is 300 million won, while newlyweds can borrow up to 400 million won. This loan product is highly expected to significantly support youth in purchasing homes.
📌 Loan Interest Rate
The interest rates for the Youth Housing Dream Loan are applied differently according to income and term. The minimum interest rate starts at around 2.2%.
| Income Bracket | 10 Years | 15 Years | 20 Years | 30 Years |
| Below 20 million won | 2.20% | 2.25% | 2.35% | 2.50% |
| Below 40 million won | 2.60% | 2.65% | 2.75% | 2.90% |
| Below 70 million won | 3.00% | 3.05% | 3.15% | 3.30% |
| Below 85 million won | 3.35% | 3.40% | 3.50% | 3.65% |
| Below 100 million won | 3.70% | 3.75% | 3.85% | 3.95% |
Young individuals with an income of 40 million won or less can receive support for loan terms up to 40 years. In this case, the interest rate will be an additional 0.1 percentage points higher compared to a 30-year term.
Notably, the interest rates applied are lower than those of existing loans like the mortgage loan (3.75–3.95%) or newlywed Ddimumdol loan (2.55–3.85%).
Especially, preferential interest rates based on life cycles allow borrowers to receive additional interest rate reduction benefits following marriage or childbirth. When getting married, the interest rate is reduced by 0.1 percentage points, while for the birth of the first child, it decreases by 0.5 percentage points, and for subsequent births, it drops by 0.2 percentage points.
Through this mechanism, interest rates can be reduced by up to 1.0 percentage points, although the minimum interest rate is set at 1.5%.
Expected Effects and Conclusion
This adjustment of the Housing and Urban Fund loan interest rates and the launch of the Youth Housing Dream Loan are expected to play a significant role in expanding homeownership opportunities for low-income individuals and young people while alleviating their housing burden.
In particular, the expected effects of this policy are manifold. Firstly, it will contribute to stabilizing the housing market by supporting the purchase of unsold homes in the provinces. Secondly, the differential interest rates are anticipated to expand support for actual home buyers. Thirdly, as the housing purchase burden on young people is alleviated, opportunities for homeownership are expected to increase. Finally, by introducing preferential interest rates based on life cycles, long-term housing stability will also be supported.
The government aims to strengthen the role of the housing ladder through this policy and create a stable living environment for young people. Therefore, it is essential for young individuals and low-income homeowners planning to purchase a home to pay attention to and actively utilize these policy changes.
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