Surge in Non-Face-to-Face Applications for Interest Rate Cuts... 110 Billion Won Saved in Interest Over 3 Years

[Asia Economy Reporter Kangwook Cho] It has been revealed that customers with improved credit who requested interest rate reductions from banks have saved over 113 billion KRW in the past three and a half years.

According to data submitted by the Financial Supervisory Service to Kim Byung-wook, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, the number of interest rate reduction requests received in the first half of this year by KB Kookmin, Shinhan, Woori, Hana, SC First, Citi, Industrial Bank of Korea, K Bank, and Kakao Bank totaled 338,082 cases.

The number increased from 110,371 cases in 2017 to 228,558 in 2018, and 478,150 in 2019, showing a steeper upward trend.

The right to request an interest rate reduction allows borrowers to ask for a cut in loan interest rates reflecting improved credit status, such as when their credit rating improves, they get employed or promoted, or their assets increase. This right was activated following its legalization in June last year.

Notably, the proportion of non-face-to-face applications among all interest rate reduction requests surged from 60.3% in 2017 to 85.9% in 2018, 95.2% in 2019, and 98.2% in the first half of 2020. Most customers are easily saving on loan interest online without visiting bank branches.

The number of accepted interest rate reduction requests increased from 45,820 cases in 2017 to 60,877 in 2018, 143,059 in 2019, and 143,059 in the first half of this year. However, the estimated amount of interest saved due to acceptance decreased annually during the same period, from 43.88 billion KRW, 32.792 billion KRW, 27.731 billion KRW, to 9.322 billion KRW.

The acceptance rate of interest rate reduction requests was 41.5% in 2017, 26.6% in 2018, 29.9% in 2019, and about 32.5% in the first half of this year.

Kim Byung-wook emphasized, "Banks and financial authorities should actively promote the right to request interest rate reductions and strive to increase the acceptance rate so that more citizens can enjoy their rights and benefits."

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