Bank of Korea staff tapped below-market home loans while public shut out

Bank of Korea employees held nearly 6 billion won in in-house housing loans as of the end of the first half of this year, at an interest rate 0.8 percentage point below the average rate offered by commercial banks.

According to data submitted to People Power Party lawmaker Kim Sang-hoon of the National Assembly's Finance and Economy Planning Committee, 150 Bank of Korea employees were using the central bank's in-house housing loan program as of end-June, with outstanding balances totaling 5.96 billion won.

By loan type, 122 employees — accounting for 81 percent of the total — had taken out home-purchase loans, with outstanding balances of 4.8 billion won.

Another 28 employees held jeonse deposit and other housing rental loans, with outstanding balances of 1.15 billion won.

The average loan per employee came to 39.4 million won for home-purchase loans and 41.2 million won for rental loans.

The interest rate applied to the housing loan program in the first half of this year was 3.5 percent per annum.

That is 0.8 percentage point below the average rate of 4.3 percent per annum on new mortgage loans at commercial banks during the same period, as published by the Bank of Korea's economic statistics system.

The Bank of Korea offers housing loans of up to 50 million won to employees without a home who have worked at the institution for at least one year and are purchasing or renting a property. Home-purchase loans are repaid in equal principal installments over 20 years, while rental loans are repaid in a lump sum when the lease expires.

Because the in-house loans are not shared with credit rating agencies, they are not directly factored into the debt service ratio calculation, unlike loans from the general financial sector.

Some observers argue that it is inequitable for the Bank of Korea to operate an in-house housing loan program for its staff at a time when financial authorities are pressing private conglomerates such as Samsung Electronics and SK hynix to tighten management of their own in-house lending as part of broader efforts to rein in household debt.

Meanwhile, data on in-house housing loans at public institutions submitted to People Power Party lawmaker Song Eon-seog showed that 52 public institutions operating such programs last year extended a combined 102 billion won in in-house housing loans, used by 1,582 employees. Nineteen institutions — including the Korea Real Estate Board and the Korea Housing and Urban Guarantee Corporation — were found to have provided high-value loans at below-guideline interest rates, in violation of government directives.