The Korea Land and Housing Corporation (LH) has been found to offer housing loans to its employees with limits and interest rates that exceed government guidelines. Among 52 public institutions that operated internal housing loans last year, 22 did not adhere to government standards, raising concerns about the ongoing practice of providing 'low-interest, high-amount' loans within public institutions.
On September 7, Kim Mi-ae, a member of the National Assembly from the People Power Party, revealed data from LH indicating that from 2021 to August of this year, the corporation issued 1,029 internal housing loans totaling approximately 82.9 billion won.
Of these loans, 524 were for rental purposes, amounting to 44.4 billion won, while 505 were for home purchases, totaling 38.5 billion won.
LH's rental loan limit is set at 90 million won for the metropolitan area, major cities, provincial capitals, and special self-governing regions, while it is 80 million won for other areas. Additionally, depending on the number of children, borrowers can receive up to an extra 50 million won, allowing for a maximum loan of 140 million won in metropolitan areas and major cities.
This is significantly higher than the government-set limit of 70 million won per employee for housing loans, as outlined in the Ministry of Economy and Finance's guidelines on public institution innovation.
There is also a discrepancy in interest rates. LH's rental loan interest rate is set at 3.28%, based on the corporation's weighted average borrowing rate. In contrast, the government guideline, which follows the Bank of Korea's published household loan rates, is 4.46% for the third quarter, 1.18 percentage points higher than LH's rate.
For home purchase loans, LH applies different criteria than the government. While the government mandates the application of the loan-to-value (LTV) ratio and requires a mortgage on the property, LH does not apply the LTV and allows borrowers to choose between setting a mortgage or obtaining insurance. Borrowers can also utilize overlapping loans from financial institutions for housing mortgages or rental loans, and there is no separate procedure to verify eligibility for loans from the Housing and Urban Fund, such as the Didirim Loan.
LH stated, "Reducing loan limits and increasing interest rates under the Labor Standards Act require union consent, and we have continuously strengthened our criteria through discussions with the union. We are also working to improve the application of LTV for home purchase loans, mortgage settings, and rental loan limits and interest rates."
The issue of internal housing loans deviating from government guidelines is not unique to LH. Last year, 22 out of 52 public institutions that operated internal housing loans applied limits or interest rates that differed from government guidelines.
These 22 institutions provided a total of 67.1 billion won in housing loans to 1,034 employees. During the same period, the total amount of internal housing loans across all public institutions was 102 billion won.
For instance, the Korea Housing Guarantee Corporation (HUG) offered up to 200 million won for home purchase loans and 150 million won for rental loans at an interest rate of 2.5%. The Korea Real Estate Agency also provided loans for home purchases and rentals up to 140 million won, double the government standard.
Despite the government's establishment of limits and interest rate criteria for internal loans at public institutions, many continue to offer more favorable loan conditions citing their own welfare programs.
Kim Mi-ae remarked, "While raising the bar for loans for the public, is it fair for LH, the agency responsible for housing policy, to operate loans under more favorable conditions than the government guidelines and even demand relaxed standards? The Ministry of Land, Infrastructure and Transport must immediately rectify LH's non-compliance and conduct a thorough inspection of the internal housing loan practices of its affiliated public institutions."
On September 7, Kim Mi-ae, a member of the National Assembly from the People Power Party, revealed data from LH indicating that from 2021 to August of this year, the corporation issued 1,029 internal housing loans totaling approximately 82.9 billion won.
Of these loans, 524 were for rental purposes, amounting to 44.4 billion won, while 505 were for home purchases, totaling 38.5 billion won.
LH's rental loan limit is set at 90 million won for the metropolitan area, major cities, provincial capitals, and special self-governing regions, while it is 80 million won for other areas. Additionally, depending on the number of children, borrowers can receive up to an extra 50 million won, allowing for a maximum loan of 140 million won in metropolitan areas and major cities.
This is significantly higher than the government-set limit of 70 million won per employee for housing loans, as outlined in the Ministry of Economy and Finance's guidelines on public institution innovation.
There is also a discrepancy in interest rates. LH's rental loan interest rate is set at 3.28%, based on the corporation's weighted average borrowing rate. In contrast, the government guideline, which follows the Bank of Korea's published household loan rates, is 4.46% for the third quarter, 1.18 percentage points higher than LH's rate.
For home purchase loans, LH applies different criteria than the government. While the government mandates the application of the loan-to-value (LTV) ratio and requires a mortgage on the property, LH does not apply the LTV and allows borrowers to choose between setting a mortgage or obtaining insurance. Borrowers can also utilize overlapping loans from financial institutions for housing mortgages or rental loans, and there is no separate procedure to verify eligibility for loans from the Housing and Urban Fund, such as the Didirim Loan.
LH stated, "Reducing loan limits and increasing interest rates under the Labor Standards Act require union consent, and we have continuously strengthened our criteria through discussions with the union. We are also working to improve the application of LTV for home purchase loans, mortgage settings, and rental loan limits and interest rates."
The issue of internal housing loans deviating from government guidelines is not unique to LH. Last year, 22 out of 52 public institutions that operated internal housing loans applied limits or interest rates that differed from government guidelines.
These 22 institutions provided a total of 67.1 billion won in housing loans to 1,034 employees. During the same period, the total amount of internal housing loans across all public institutions was 102 billion won.
For instance, the Korea Housing Guarantee Corporation (HUG) offered up to 200 million won for home purchase loans and 150 million won for rental loans at an interest rate of 2.5%. The Korea Real Estate Agency also provided loans for home purchases and rentals up to 140 million won, double the government standard.
Despite the government's establishment of limits and interest rate criteria for internal loans at public institutions, many continue to offer more favorable loan conditions citing their own welfare programs.
Kim Mi-ae remarked, "While raising the bar for loans for the public, is it fair for LH, the agency responsible for housing policy, to operate loans under more favorable conditions than the government guidelines and even demand relaxed standards? The Ministry of Land, Infrastructure and Transport must immediately rectify LH's non-compliance and conduct a thorough inspection of the internal housing loan practices of its affiliated public institutions."
* This article has been translated by AI.
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