[Exclusive] Youth Rent Loans at 1% Interest "As Good as Nonexistent"

Data from Rep. Hwang Unha of the Rebuilding Korea Party's office
Youth-Only Deposit-Backed Monthly Rent Loan
Five-year cumulative execution rate around 2%
Calls to assess the program's effectiveness

The cumulative disbursement rate over five years for the “Youth-Only Deposit-Backed Monthly Rent Loan,” introduced to ease young people’s housing costs, was around 2%, according to data. Despite being a policy loan with an annual interest rate in the 1% range, its disbursement rate has remained between 1% and 2% for several years. Critics say the program’s effectiveness should be reviewed, especially since the Housing and Urban Guarantee Corporation (HUG) does not classify the reasons loans are not disbursed.

Data on applications for and disbursements of the Youth-Only Deposit-Backed Monthly Rent Loan from 2021 to 2025, submitted by HUG to Hwang Un-ha of the Rebuilding Korea Party, a member of the National Assembly’s Land, Infrastructure and Transport Committee, showed that only 565 of 28,836 applications resulted in actual disbursements, as of October 16.

The disbursement rate was consistently low each year. It stood at just 0.7% in 2021, rose to 2.3% in both 2022 and 2023, and was 1.9% in both 2024 and 2025. It did not exceed 3% in any of the past five years.

Introduced in December 2018, the program is a Housing and Urban Development Fund policy loan designed to reduce young people’s housing costs for jeonse and monthly rentals. It provides low-interest loans for both rental deposits and monthly rent. The annual interest rate on deposit loans is 1.3%; monthly rent loans are interest-free for amounts up to KRW 200,000 per month, with an annual rate of 1.0% applied to any amount above that.

Other housing support loans for young people have also had low disbursement figures or declining rates. Under the Youth Housing Dream Didimdol Loan, introduced in 2025 to help young people buy their own homes, only 36 of 265 applications nationwide were disbursed last year, for a disbursement rate of 13.6%.

The Small and Medium-Sized Enterprise Employee Youth Jeonse and Monthly Rent Deposit Loan, which supported young people employed by small and medium-sized enterprises in securing rental deposits, saw its disbursement rate fall each year, from 74.4% in 2021 to 70.9% in 2022, 67.7% in 2023 and 58.6% in 2024. That was a decline of 15.8 percentage points over three years.

A more fundamental problem is that HUG does not track the reasons for non-disbursement by category. Under the Housing and Urban Fund Act, HUG handles related work, including asset reviews, during the actual loan process, while entrusted banks conduct individual loan reviews and disburse the loans. However, there are no rules requiring HUG to systematically collect and manage information on the reasons for non-disbursement arising during banks’ loan review and disbursement processes, or on possible improvements.

Critics say the Ministry of Land, Infrastructure and Transport should work with HUG and entrusted banks to establish a system for identifying the reasons for non-disbursement. They also say that for products with low disbursement rates over several years, the eligibility criteria and review procedures should be assessed to determine whether they reflect young people’s actual housing circumstances.

Assemblyman Hwang said, “We need to find out how many of the young people who need them are actually receiving the policy loans introduced to ease their housing costs. It is especially concerning that the disbursement rates for some products have remained extremely low for years, yet the specific reasons the loans are not being disbursed have not even been identified. This needs to be addressed.”

Rep. Hwang Un-ha of the Rebuilding Korea Party. [Photo by the lawmaker's office]

This content was produced with the assistance of AI translation services.