Samsung Electronics has announced that it will limit its in-house housing loans for employees without homes to properties sized at 85 square meters (approximately 915 square feet) or smaller. This decision comes amid concerns that such loans could further fuel the rising housing prices, particularly in Seoul.
According to Yonhap News on July 5, Samsung Electronics will restrict the eligible properties for its housing stability support loan program to those under 85 square meters in the metropolitan area and six major cities nationwide. The company plans to implement this change within the month after coordinating details with the largest labor union, the Samsung Electronics branch of the Korean Confederation of Trade Unions.
In May, Samsung introduced an in-house loan program that allows employees to borrow up to 500 million won (approximately $380,000) at an interest rate of 1.5% per year, following an agreement with labor representatives. The specifics regarding the loan amounts, eligibility, and implementation timeline were left to the company's discretion.
However, Samsung is considering eliminating the tiered loan limits based on employee rank, standardizing the loan amount to 500 million won.
Samsung Display, which has a similar in-house loan program, also decided to restrict loans to properties under 85 square meters in the metropolitan area and major cities after a union vote held from July 1 to 3.
The limitation on eligible properties is in line with the financial authorities' stance against high-value housing loans, which do not align with current lending regulations. Since last year, financial authorities have implemented strict lending regulations, including a cap of 600 million won on mortgage loans in regulated areas and differentiated loan limits based on housing price brackets.
Industry analysts predict that, related to Samsung Electronics alone, a total of 36.6 trillion won (approximately $28 billion) could flow into the real estate market by next year, combining performance bonuses (7.6 trillion won) and the total amount of in-house loans (29 trillion won). This has raised concerns that in-house loans may exacerbate market distortions as they fall outside the regulatory framework.
In-house loans are classified as personal loans with a corporate welfare aspect, potentially exempting them from regulations such as the total debt service ratio (DSR) that governs financial sector loans.
* This article has been translated by AI.
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