"Stop Bank Excessive Profits, Record High Interest Earnings"... Petition Emerges Amid Soaring Interest Rates

Mixed Mortgage Loan Interest Rates Exceed 5%
Increased Additional Rates and Decreased Preferential Rates

Photo by Yonhap News

[Asia Economy Reporter Na Ye-eun] As various regulations have been implemented to manage household loans, borrowers' complaints are growing. Posts urging a reduction in loan interest rates have been posted on the Blue House bulletin board.

On the 5th, a petition titled "Please stop banks from profiteering by raising additional interest rates under the pretext of managing household loans" was posted on the Blue House National Petition Board.

The petitioner, Mr. A, stated, "Due to regulations on the growth rate of household loans, banks and financial institutions are exploiting the 'scarcity of loans' as a weapon to raise additional interest rates and eliminate preferential rates, thereby engaging in profiteering." He added, "Even when extending existing loans, they increase the additional interest rate by 1%."

He continued, "Low-income people who do not have money to repay immediately are forced to accept high-interest extensions reluctantly," and lamented, "The government was concerned about interest rate hikes, but a strange phenomenon is occurring where banks' additional interest rates rise earlier and more sharply than the base interest rate or bond yields."

He criticized, "Is the Financial Services Commission managing household loans to increase banks' profits? The damage is entirely borne by low-income people."

In fact, loan interest rates have been soaring steeply day by day recently.

As of the 1st, the variable interest rates for mortgage loans linked to the new COFIX at KB Kookmin, Shinhan, Hana, and Woori Banks ranged from 3.31% to 4.814% annually, compared to 2.62% to 4.19% at the end of August. The lower end rose by 0.69 percentage points and the upper end by 0.624 percentage points over two months.

The increase in mixed (fixed) mortgage loan rates was even greater. During the same period, mixed mortgage loan rates jumped from 2.92%?4.42% to 3.97%?5.377%. Both the upper and lower ends rose by about 1 percentage point in two months.

For unsecured loans, the current interest rates for grade 1 borrowers over one year range from 3.35% to 4.68%. Compared to the end of August (3.02%?4.17%), the lower end increased by 0.33 percentage points and the upper end by 0.51 percentage points.

Meanwhile, amid this situation, banks' interest income has surged to an all-time high due to loan expansion and rapid growth in interest profits. The five major financial groups?KB, Shinhan, Hana, Woori, and NH Nonghyup?are reported to have recorded the largest cumulative net profits ever through the third quarter of this year.

Looking at the won-denominated loans at the end of the third quarter, KB Kookmin Bank (311.8 trillion won), Hana Bank (254.352 trillion won), Woori Bank (258.1 trillion won), and NH Nonghyup Bank (252.4516 trillion won) each increased by 5.5%, 6.3%, 6.9%, and 6.4%, respectively, compared to the end of last year.

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