Sustainable Financing Framework:
KHFC was established in March 2004 as a government entity under the Korea Housing Finance Corporation Act No. 7030, 31 December 2003, as amended (the “KHFC Act”) with a mandate to support the Korean government’s housing welfare policy and provide a sustainable financing framework.
KHFC provides long-term fixed-rate amortized mortgage loans, housing finance credit guarantees, and reverse mortgage guarantees to deliver on its mission to enhance the welfare of people and national economic development through a long-term and stable supply of housing finance.
Since 2004 up to 2021-end, KHFC has assisted more than 3.3 million households to purchase their residential property by extending over KRW366 trillion of mortgage loans through its diverse mortgage products.
For 18 years since its establishment, Korea Housing Finance Corporation has achieved remarkable growth both in terms of quality and quantity for providing a sustainable financing framework to become the best housing finance institution that grows along with the happiness of people.
In particular, despite the most formidable challenges presented by the unprecedented COVID-19 crisis in 2020, KHFC focused on what it had to do and what it could do best and delivered meaningful changes and feats.
Integrity and ethical management a key parts of its commitment to providing a sustainable financing framework.
KHFC achieved the highest ranking among 573 institutions in the integrity evaluation of public institutions by the Anti-Corruption & Civil Rights Commission in 2017, receiving the designation as a Grade 1 agency, marking 8 consecutive years since 2010.
In December 2018, KHFC proclaimed the Declaration of Human Rights, complying with the principles of the UN Global Compact and revealing KHFC’s strong willingness to provide a sustainable financing framework.
In KHFC’s Declaration of Human Rights, KHFC indicated its aim to respect/protect human dignity and value and consistently realize/enhance social values and sustainable development via KHFC’s business activities.
Through human rights management, KHFC will endeavor to promote a cultural environment that respects human rights not only within KHFC but also to its counterparties as well.
As the government agency dedicated to the implementation of Korea’s housing welfare policy, KHFC has been actively addressing these challenges by developing and purchasing KHFC mortgage loans, securitizing KHFC mortgage loans, and managing the Housing Finance Credit Guarantee Fund (HFCGF).
The HFCGF is the source of (a) credit guarantees to financial institutions engaged in providing housing loans to moderate and low-income homeowners or tenants and construction loans to small-sized home builders and (b) credit guarantees to financial institutions engaged in lending reverse mortgage loans to senior citizens, thus ensuring a sustainable financing framework.
KHFC’s mortgage loans are long-term (up to 50 years) fixed-rate amortizing products, designed to reduce the repayment burden for low to moderate-income households for their home purchase, especially during the rising interest rate environment, and stabilize and improve the structure of the mortgage loan market.
Low-income borrowers who satisfy certain criteria may be eligible for discounts from the standard interest rates with such discounts subsidized by the government.
Borrowers can also enjoy less onerous regulatory requirements, such as a higher loan-to-value (LTV) ratio and debt-to-income (DTI) ratio. In 2020, KHFC disbursed KRW35.4 trillion of mortgage loans, assisting 293,000 households to become homeowners.
Through its active securitization activities, KHFC aims to stabilize the Korean mortgage market and lessen the payment burden for low to moderate-income households by purchasing mortgage loans from other Korean financial institutions and achieving a sustainable financing framework.
Securitization provides KHFC with the primary funding source for the ongoing purchase of KHFC mortgage loans and provides Korean financial institutions originating other mortgage loans with a means to improve their liquidity position.
KHFC also provides a number of housing finance credit guarantee programs and reserve mortgage programs, specifically designed for the target population of the government’s housing welfare policy.
As a government entity with a strong environmental and social mandate, KHFC recognizes the importance of sustainable management through its business activities and has established “securing sustainable future growth momentum” as the new strategic goal.
KHFC has established the framework for sustainable growth, and has signed on to the UN Global Compact in 2008, and signed Fair Player Club, promoting transparency and anti-corruption.
Also read: Housing Deposit in Korea