Loan Restrictions Eased... KakaoBank Also Lowers Interest Rates by Up to 0.5%P

Interest Rate Reduction for Mid-Term Loans and Jeonwolse Deposit Loans

[Asia Economy Reporter Minwoo Lee] Following major commercial banks, internet-only bank KakaoBank has also loosened its lending restrictions. The loan interest rates have been reduced by up to 0.5 percentage points (p). This move appears to lower the threshold again as household loan capacity increases due to regulatory pressure and the impact of interest rate hikes.

KakaoBank announced on the 24th that from 6 a.m., it will lower interest rates for new applicants on mid-credit loans and jeonse (key money deposit) loans.

Accordingly, the minimum interest rate for mid-credit loans will be lowered by 0.489%p from 4.067% per annum as of the previous day to 3.578%. Eligible borrowers are wage earners with an annual income of over 20 million KRW and at least one year of employment. The maximum loan limit is 100 million KRW.

The minimum interest rate for jeonse deposit loans will also decrease by 0.2%p from 3.082% per annum as of the previous day to 2.882%. This product targets customers who are either homeless or own one house jointly with their spouse. Loans can cover up to 80% of the jeonse deposit, with a maximum loan amount of 222 million KRW.

Following commercial banks, internet-only bank KakaoBank has lowered its loan thresholds. The day before, KB Kookmin Bank decided to change the jeonse loan limit upon lease contract renewal starting from the 30th to ‘within 80% of the existing rental deposit (jeonse price).’ Previously, loans were only available for the lesser amount between 80% of the rental deposit and the increased portion. Additionally, the jeonse loan application period will be extended to after the final payment date, and non-face-to-face jeonse loans for one-house owners will resume. On the same day, NH Nonghyup Bank also decided to increase the loan limit upon lease contract renewal to ‘within 80% of the rental deposit stated in the contract.’ Earlier, Woori, Hana, and Shinhan Banks also announced loan handling after the final payment date and loans within 80% of the rental deposit upon jeonse renewal.

This is interpreted as additional loan capacity emerging due to a decrease in household loans caused by regulatory pressure on total household loan limits and the impact of interest rate hikes. According to the Bank of Korea, as of the end of last month, the outstanding household loans at banks decreased by 100 billion KRW from the previous month to 1,060.1 trillion KRW. This marks a trend of decline for three consecutive months since December last year.

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