As the government tightens household lending regulations, a growing number of office workers are borrowing from their employers rather than banks to buy homes. Corporate loans, which are not subject to debt-service ratio (DSR) regulations, are emerging as a new channel for financing home purchases.
According to data submitted by SGI Seoul Guarantee to the office of Rep. Kim Sang-hoon of the People Power Party on Thursday, SGI Seoul Guarantee's guarantees for private corporate loans totaled 602.5 billion won from January to April this year. That marks a 26.3% increase from 477.3 billion won during the same period last year.
By purpose, 448.5 billion won was for home purchases and 154.1 billion won for living expenses. The guarantee amount related to home purchases in particular rose 29.1% year-on-year, a larger increase.
Considering that companies typically receive guarantees for 80% to 90% of their corporate loan amounts, the actual scale of loans executed is estimated to exceed the tallied figure.
Industry observers attribute the rise in demand for corporate loans to the financial authorities' tighter management of total household lending. The Financial Services Commission (FSC) is managing the household loan growth target at around 1.5% this year and is also strictly controlling the supply of bank mortgages.
Corporate loans, by contrast, draw on companies' own funds and are therefore not subject to DSR rules or total household lending regulations. As a result, welfare programs that support home purchase funds, mainly at some large companies, are drawing attention.
A leading example is Samsung Electronics. The company's labor and management recently agreed to expand the corporate loan limit for home purchases to a maximum of 500 million won. The repayment period is up to 10 years. Eligible employees are those without a home or single-home owners on the condition of disposing of their existing home, with an interest rate of around 1.5% per year. Given that current bank mortgage rates are around 4% to 5% per year, this is an exceptional benefit.
SK hynix is also reportedly facing demands to introduce a corporate housing loan program at a level similar to Samsung Electronics' ahead of wage negotiations. SK hynix's current housing fund loan rate is 1.5% per year, the same as Samsung Electronics. The limit, however, differs at a maximum of 100 million won. The repayment method involves equal principal payments over 15 years after a one-year grace period.
The expansion of corporate loans is also fueling growing controversy over fairness. While high interest rates and lending regulations are raising the bar for home purchases for ordinary workers, some employees at large companies can receive hundreds of millions of won in home funds at low interest rates. Critics point out that following high performance bonuses, the expansion of loan benefits is widening the gap between workplaces.
Financial authorities are also closely watching the impact of corporate loans on the housing market. However, given their strong character as corporate welfare, the authorities are cautious about direct regulation.
Instead, they are encouraging companies to set senior collateral rights at a level of 110% to 120% of market value, so that corporate loans are not used as an excessive leverage tool.
For example, if an employee purchases an apartment with a market value of 1 billion won while receiving a 500 million won corporate loan from the company, a senior mortgage is placed for that amount. In this case, it becomes virtually difficult to obtain an additional bank mortgage, which has the effect of preventing excessive borrowing, according to the explanation.
"The original purpose of financial regulation is to manage the soundness of loans handled by financial institutions as a business and to verify borrowers' repayment capacity," an FSC official said. "Since corporate loans are operated as a form of corporate welfare, there is insufficient justification to regulate them on the same basis."
