The share of homes purchased in Seoul using the Bogeumjari Loan, a policy mortgage product, has fallen to the 7 percent range. Over the past decade, the average sale price of a Seoul apartment has risen from 600 million won to 1.3 billion won, but the home price cap for Bogeumjari Loan eligibility has remained frozen for nine years.
According to the Korea Housing Finance Corporation (HF) on the 18th, a total of 3,378 homes in Seoul were purchased using the Bogeumjari Loan between January and May this year, or 7.1 percent of the total 47,621 cases. Driven by active first-time home purchases centered on people in their 30s this year, the figure rose from last year's 4.7 percent, but it is nearly halved compared with 12.6 percent in 2016, 15.0 percent in 2018 and 11.1 percent in 2020.
The reduced use of policy mortgages in Seoul has been influenced by the home price requirement. The Bogeumjari Loan requires not only an income condition of a combined annual household income of 70 million won or less, but also that the collateral home have a sale price of 600 million won or less. After the government lowered the eligible home price ceiling from 900 million won to 600 million won in 2017, saying it would focus housing benefits on lower-income groups, it has maintained this standard for nine years. The Korea Housing & Urban Guarantee Corporation's (HUG) Didimdol Loan (for home purchases) has also kept its eligible home price at 500 million won since 2017, and the Beotimmok Loan (jeonse loan) has been limited to lease deposits of 300 million won or less since 2015.
While the requirements for policy mortgages have remained fixed, Seoul real estate has continued to climb. According to the Korea Real Estate Board, the average sale price of a Seoul apartment was 550 million won in June 2016, but rose to 1.346 billion won in June this year. This represents a 140 percent jump over the past decade. The average apartment sale price in Nowon-gu, where actual demand is high, rose to 675 million won as of June this year, and Dobong-gu, which had the lowest prices among Seoul's districts, also surpassed 600 million won. This means it is not easy to find apartments priced at 600 million won or less even on the outskirts of Seoul.
There has been discussion about the need to ease policy mortgage requirements, but it has not been carried through. This is because of the judgment that, "as a policy product, it is necessary to concentrate support on more vulnerable groups in greater difficulty." In 2022, financial authorities considered restoring the Bogeumjari Loan's eligible home price ceiling to 900 million won, but instead replaced it in 2023 with a one-year "Special Bogeumjari Loan" that expanded support eligibility to homes worth up to 900 million won. One financial industry official said, "There were demands to expand eligible homes, but the revision was not made because of the judgment that, given the nature of a policy product, limited resources should go to lower-income people in greater difficulty."
The market points out that the range of eligible homes needs to be brought in line with reality in order to achieve the policy mortgage's goal of "supporting housing stability." Recently, KB Kookmin Bank capped mortgage loans at 300 million won across the board, and commercial banks have also raised lending thresholds, making it even more difficult for young people and lower-income households to secure funds.
In fact, borrowers using the Bogeumjari Loan in Seoul had greater demand for changes to the requirements than those in other regions. According to the Korea Housing Finance Corporation's "2025 Housing Finance and Bogeumjari Loan Survey," 10.6 percent of all Bogeumjari Loan users thought that "the home price condition should be changed." However, among users in the Seoul region, the proportion who answered that it "should be changed" was 28.3 percent, about three times higher than the national average.
When asked about the "appropriate home price if the home price condition were changed," respondents nationwide answered that an average of 847 million won or less would be appropriate. In the Seoul region, however, the average figure was tallied at 940 million won, about 10 percent higher than the national average.
