"Banks on Alert to 'Increase Household Loans'... Lowering Loan Thresholds"

Woori Bank to Ease Jeonse Loan Regulations
Kookmin Bank Increases Overdraft Limit

[Asia Economy Reporter Sim Nayoung] As household loans decreased for two consecutive months in January and February, banks have started efforts to 'increase lending.' Woori Bank has decided to ease the regulations on jeonse loans that had been in place since the end of last year. Following the financial authorities' policy to manage the total volume of household loans, the five major commercial banks and other domestic retail finance banks had jointly implemented regulations related to loan limits, loan application periods, and restrictions on non-face-to-face applications starting from October 27 last year. With Woori Bank lifting these restrictions first after about five months, Shinhan Bank and Hana Bank are also reviewing similar measures.

According to the financial sector on the 20th, Woori Bank will change the loan limit for jeonse loans related to lease (jeonse) contract renewals from the previous 'within the increased amount of the deposit (jeonse price)' to 'within 80% of the deposit amount stated in the renewal contract,' effective from the 21st.

For example, if the initial jeonse deposit was 100 million KRW and it increased by 10 million KRW upon contract renewal, previously only 10 million KRW could be borrowed, but now up to 80% of the total deposit (110 million KRW), which is 88 million KRW, can be borrowed. However, if there is an outstanding loan from the previous 100 million KRW deposit, that amount will be deducted from the 88 million KRW, and only the remaining amount can be borrowed.

The application period for jeonse loans, which was previously limited to before the balance payment date stated in the contract, will also be extended. Loan applications can be made within three months from the earlier of the balance payment date or the resident registration move-in date on the new jeonse contract. The same applies to contract renewals. Previously, loans could only be applied for before the renewal contract start date, but from the 21st, applications can be made within three months from the renewal contract start date.

The restriction on non-face-to-face jeonse loan applications will also be lifted, allowing one-homeowners to apply for jeonse loans without visiting bank branches starting from the 21st. Instead, they can apply through internet banking or the mobile app Woori WON Banking.

Additionally, Woori Bank will apply a 'special preferential interest rate for new loans,' offering a 0.2 percentage point reduction on apartment loans, real estate loans secured by residential officetels, Woori Jeonse Loans, and Woori WON Housing Loans from the 21st of this month until May 31.

Meanwhile, KB Kookmin Bank will lower mortgage loan interest rates from the 7th of this month until June 6. Variable rates will be reduced by 0.2 percentage points, and mixed rates by 0.1 percentage points. The maximum limit for overdraft accounts will also be increased (from 50 million KRW to 150 million KRW). In January, Hana Bank and NongHyup Bank had already increased overdraft limits and lowered interest rates.

The outstanding balance of household loans at the five major commercial banks decreased from 709.0529 trillion KRW in December last year to 707.6895 trillion KRW in January this year, and further down to 705.9373 trillion KRW in February.

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