Housing Loan Slows Down, and Loan Brokers Lose Direction as Loan Brokerage Platforms Expand...

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] As the real estate market slows down and mortgage loans decrease, the number of loan solicitors, who act as outsourced loan sales agents for each bank, is also on the decline. With the gradual growth of loan brokerage platforms operated by fintech (finance + technology) companies, it is analyzed that the space for loan solicitors is gradually disappearing.

According to the financial industry on the 23rd, the total number of loan solicitors registered with the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?was 2,732 as of last month. This number had increased to 3,026 during the first year of COVID-19 due to strengthened non-face-to-face sales activities but has been steadily decreasing since then. It has dropped nearly 10% in two years, returning to a level similar to that before COVID-19 in 2019 (2,672).

Loan solicitors belong to loan solicitation corporations that handle loan solicitation tasks on behalf of financial companies. Due to the exclusive contract system with one company, they are responsible for loans from one bank but tend to switch banks freely depending on commission differences. While their numbers increased sharply in 2020 due to the rise in household loans, the trend has been declining recently.

The low-interest-rate era that continued during the COVID-19 period has ended, and entering a high-interest-rate era has directly impacted the contraction of the real estate market. As of the end of May, the household loan balance of the five major domestic banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) was 701.3954 trillion KRW, down 9.963 billion KRW (0.14%) from the previous month. This marks five consecutive months of decline this year. Starting with the U.S. Federal Reserve (Fed) and followed by the Bank of Korea, the rapid increase in benchmark interest rates has frozen the loan market.

Even mortgage loans, which had withstood the decline in household loans, have decreased. The mortgage loan balance of the five major banks last month was 506.6524 trillion KRW, down 1.657 billion KRW from the previous month. This is the first time in about five years since March 2017 that the month-end mortgage loan balance has decreased compared to the previous month. Since loan solicitors mainly handle mortgage loans, they are considered to have taken a direct hit.

The banking sector’s active promotion of non-face-to-face services based on digital platforms is also a negative factor. Since Woori Bank launched a fully non-face-to-face mortgage loan product in August last year, not only the five major banks but also internet-only banks without branches have been offering non-face-to-face mortgage loans starting this year. Until now, non-face-to-face mortgage loans were mainly limited to apartments with clear market prices, but recently banks have expanded the scope to villas and multi-family houses by partnering with appraisal companies.

Loan brokerage platforms introduced by fintech companies such as Toss, Finda, KakaoPay, and Dambi are also a burden. A financial industry insider said, "Although the five major banks’ mortgage loan products are not yet available on loan brokerage platforms, as users increasingly compare loans themselves and find desired products, the space for loan solicitors will shrink."

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