Housing Mortgage Loans, How About Insurance Companies?...Lowest Interest Rate 2.03% Too

Insurance Companies' October Mortgage Loan Interest Rate Disclosure

[Image source=Yonhap News]

[Asia Economy Reporter Ki Ha-young] It has been revealed that some insurance companies offer mortgage loan interest rates lower than those of banks. This phenomenon has emerged as insurance companies' mortgage loan rates have continued to decline this year.

According to the Life Insurance Association's loan disclosure for October on the 2nd, the lowest interest rates (fixed and variable) for installment repayment apartment mortgage loan products from various life insurance companies ranged from 2.43% to 3.08%. The apartment mortgage loan rates disclosed by each company were as follows: Samsung Life 2.43%?5.01%, Shinhan Life 2.56%?3.76%, Kyobo Life 2.60%?3.63%, Fubon Hyundai Life 2.59%?5.38%, and Hanwha Life 2.70%?3.80%.

The lowest interest rates (fixed and variable) for apartment mortgage loan products from non-life insurance companies ranged from 2.03% to 2.91%. The rates from each non-life insurer were: Samsung Fire & Marine Insurance 2.03%?4.79%, KB Insurance 2.5%?4.93%, Hyundai Marine & Fire Insurance 2.59%?4.39%, and NongHyup Property & Casualty Insurance 2.91%?4.12%.

Generally, there is a perception that insurance company rates are higher than those of commercial banks. However, this year, mortgage loan interest rates from insurance companies have continuously decreased, with the lowest rates dropping to levels comparable to bank loan rates. If preferential conditions such as maintaining an insurance contract are met, it is possible to obtain a mortgage loan at rates even lower than those offered by banks.

Samsung Fire & Marine Insurance's variable rate product has a lowest interest rate of 2.03%, and the fixed rate has also dropped to as low as 2.37%.

The lowest interest rates for new mortgage loans from the five major commercial banks after the 16th of this month range from 2.31% to 2.73%, while the lowest rates applied until the 15th of this month were between 2.23% and 2.64%.

Insurance companies affiliated with the same financial groups sometimes offer lower minimum interest rates than their banks. Shinhan Life's lowest apartment mortgage loan interest rate (variable) this month is 2.56%, whereas Shinhan Bank's new lowest rate (variable) after the 16th of this month is 2.72%. Last month, some Shinhan Life customers received loans at 2.38%. During the same month, Shinhan Bank's lowest rate was 2.64%.

As the competitiveness of insurance companies' mortgage loan interest rates becomes more prominent, the outstanding balance of these loans is also increasing. As of the end of June this year, the outstanding balance of insurance company mortgage loans was 44.8 trillion KRW, an increase of 700 billion KRW in just one quarter.

Mortgage loans from insurance companies are subject to a debt service ratio (DSR) that is 20 percentage points higher than banks, at 60%. Insurance company mortgage loans can be obtained without subscribing to insurance, but preferential interest rates are applied if insurance is purchased.

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