NongHyup Bank Waives All Early Repayment Fees on Household Loans Until Year-End

[Asia Economy Reporter Kiho Sung] NH Nonghyup Bank announced on the 28th that it will temporarily waive early repayment fees in full for partial or full repayment of household loans from the 1st of next month until the end of this year to alleviate the repayment burden on household loan customers.

The bank explained that the waiver of early repayment fees was introduced to encourage repayment by resolving the inconvenience faced by customers who could not repay their loans due to early repayment fees even when they had surplus funds, and to reduce the actual interest burden on loan customers.

With this early repayment fee waiver, a customer who took out a fixed-rate, 3-year maturity real estate secured loan can save about 930,000 KRW in costs if they repay 100 million KRW of the loan after one year.

However, some qualified loans (qualified loans, Bogeumjari Loan, Didimdol Loan, Beotimmok Loan, etc.) and transfer products that impose early repayment fees according to separate agreements with external institutions among household loan products are excluded from the early repayment fee waiver. For detailed information, customers can check at NH Nonghyup Bank branches nationwide.

The waiver of early repayment fees has been an issue continuously raised during this year's national audit. Kim Byung-wook, the ruling party secretary of the National Assembly's Political Affairs Committee and a member of the Democratic Party of Korea, emphasized at the Financial Services Commission audit, “Early repayment fees were a mechanism established to compensate for losses when loan demand was low. However, now that demand has greatly increased, I believe there is little risk in not charging these fees.” He added, “We need to change our approach to protect consumers.” This points to encouraging early repayment by relatively financially stable borrowers while reducing policy burdens and supplying funds to real demand borrowers.

In response, Financial Services Commission Chairman Ko Seung-beom said, “If early repayment fees are abolished, there could be an incentive to operate products mainly with short-term variable-rate loans, and the rise in interest rates could shift the burden to consumers.” However, he added, “We will review whether there are improvements to be made by referring to cases where internet banks or commercial banks waive these fees through mobile banking,” and “We will discuss this with the banks.”

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