Kia (000270) is raising the annual ceiling on its in-house housing loan program to 35 billion won from 20 billion won. Company-funded housing loans are gaining traction at South Korea's major conglomerates, with Samsung Electronics (005930) launching a program that offers employees who do not own a home loans of up to 500 million won.
Kia agreed in this year's collective bargaining with its union to lift the annual housing loan ceiling to 35 billion won from 20 billion won starting next year, industry sources said on the 3rd.
Per-person limits remain unchanged at 100 million won for home purchase loans and 50 million won for jeonse loans, a lump-sum deposit lease. But the 15 billion won increase in the overall annual ceiling is expected to sharply expand the number of employees who can use the program.
Kia funds the program through its employee welfare fund. Loans carry an annual interest rate of 1% and run for up to 10 years. Employees with at least two years of service are eligible, and new hires receive partial support. Because the loans come from the welfare fund, they are not subject to South Korea's debt service ratio (DSR) rules.
The move is aimed at expanding tangible benefits as rising home prices and jeonse deposits push up housing costs. Housing loan programs have been growing steadily not only at Kia but also at Samsung Electronics (005930) and Hyundai Motor (005380).
Samsung Electronics this month began offering housing stability loans to employees who do not own a home, providing up to 500 million won for a home purchase and up to 300 million won for a lease. The rate is about 1.5% a year.
Hyundai Motor runs a program in partnership with Korean Federation of Community Credit Cooperatives that subsidizes interest on loans of up to 100 million won. Employees pay 1% a year while the company covers the remainder of the interest, meaning the benefit grows as market rates rise. Eligibility extends to staff at or below the senior manager level with at least one year of service.
