President Lee Proposes Raising Loan Rates for High-Credit Borrowers to Ease Burden on Low-Credit Borrowers... Lee Junseok and Han Donghoon Warn "Credit System at Risk"

President Lee Stresses Need to Lower Interest Rates for Low-Credit Borrowers
Lee Junseok: "Packaging Loan Interest Rates as Welfare Policy"
Han Donghoon: "Low-Credit Borrowers Will Suffer Even More"

As President Lee Jae-myung argued for the need to lower lending rates for low-credit borrowers, Lee Junseok, leader of the Reform New Party, and Han Donghoon, former leader of the People Power Party, simultaneously voiced criticism. During the Cabinet meeting on the 9th, President Lee asked, "What is the interest rate for guaranteed loans to those with the lowest credit?" Upon hearing the answer was 15.9%, he remarked, "Loans for people in difficult situations are more expensive. It's too cruel."

President Lee Jae-myung is speaking at the Cabinet meeting held on the 9th at the Presidential Office in Yongsan, Seoul. Photo by Yonhap News Agency

President Lee demanded institutional reform, stating, "Financial companies lend large amounts of money to top-tier customers at ultra-low interest rates. Would it not be possible to make those with easier access bear just 0.1% more, so that people who have difficulty accessing financial institutions could borrow at a rate lower than 15.9%?"

In response, on the 10th, Representative Lee Junseok posted on social media, "If lowering loan interest rates is packaged as a welfare policy, it will undermine the financial system." He added, "The reason high-credit borrowers receive lower interest rates is not a privilege, but because their risk (such as default or delinquency) is lower. The reason low-credit borrowers face higher rates is due to their greater risk of default, not because of social discrimination."

Lee Junseok, Representative of the Reform New Party

He continued, "Those who borrow only what they can and have faithfully repaid-those who have managed their credit responsibly-should not be penalized because of the president's 'lack of economic understanding.' Why should a high-credit borrower who has steadily repaid a 1 million won loan be treated less favorably than a low-credit borrower who borrowed 10 billion won and committed fraud? The president's remarks are a dangerous form of populism that shakes the very foundation of finance under the guise of supporting the vulnerable." He further criticized, "President Lee is packaging the complex calculations and risk management required for loan interest as if it were a welfare policy."

Han Donghoon, former leader of the People Power Party

Former leader Han Donghoon also stated, "President Lee's approach is wrong," adding, "A policy that raises interest rates for those who improve their credit by repaying loans diligently, while lowering rates for those whose credit falls because they do not repay, will undermine the foundation of a credit-based society." He pointed out, "If this policy is implemented, financial institutions will face a greater risk of not recovering their loans, and will become even more reluctant to lend to low-credit borrowers with lower interest rates. As a result, low-credit borrowers will be deprived of loan opportunities and suffer even more."

President Lee previously proposed the People's Financial Stability Fund as a presidential campaign pledge. The idea is to secure funding from financial institutions in order to provide financial products for the public at lower interest rates. The National Planning Committee also announced a plan to expand inclusive finance by having the government and the financial sector jointly establish a fund to increase the supply of policy-based public finance. Earlier, on the 5th, nominee for Financial Services Commission Chairman Lee Eogwon stated at a National Assembly confirmation hearing, "I will work actively with the Ministry of Economy and Finance to establish the fund."