Financial Supervisory Service Chief Transformed into Bank Employee: "Use Interest Rate Cap Type Mortgage Loans"

Lee Bok-hyun, Financial Supervisory Service Governor, Visits Shinhan Bank Namdaemun Branch

On the 14th, at the Shinhan Bank Namdaemun branch in Jung-gu, Seoul, Lee Bok-hyun, Governor of the Financial Supervisory Service (right), is seen explaining loan products directly to a customer. / Photo by Song Seung-seop

[Asia Economy Reporter Song Seung-seop] On the 14th, Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), visited bank branches to listen to the difficulties faced by self-employed individuals and the voices of on-site employees. He showed confidence by personally explaining the improved capped interest rate mortgage loan products at the loan counters.

On this day, Governor Lee met with officials and nearby merchants at the Shinhan Bank Namdaemun branch in Jung-gu, Seoul, stating, “For self-employed individuals, the business environment has already deteriorated due to COVID-19, and difficulties are intensifying due to rising interest rates and raw material prices.”

He continued, “Household borrowers are also facing concerns about declining debt repayment capacity, especially among low-income and low-credit borrowers, youth, and elderly borrowers, due to rising interest rates and falling asset prices,” adding, “In such times, it is very meaningful for the financial sector to actively strive to protect vulnerable borrowers and alleviate their burdens autonomously beyond government-level measures.”

He also urged, “Please carefully ensure that various support programs for vulnerable borrowers currently operated by the financial sector work more effectively to provide practical help to these borrowers,” and requested, “In preparation for the end of maturity extensions and repayment deferrals for small business owners and SMEs, I ask the banking sector to actively work so that these borrowers can transition smoothly without experiencing sudden repayment burdens.”

Governor Lee also promoted the capped interest rate mortgage loan product directly at the loan counter to small business owners who visited the branch. On this day, the FSS unveiled the improved capped interest rate mortgage loan, focusing on the capped interest level and reduction of additional interest rates. He explained, “When using a variable interest rate, there is a cap on the interest rate to prevent it from rising further,” adding, “This time, there is no additional interest burden, and rather, you receive benefits, so this product is much better.”

After the event, when reporters pointed out that the performance of capped interest rate mortgage loans might not be good, he rebutted, “Previously, interest rates did not rise so sharply.” Governor Lee said, “Currently, no one can predict how much interest rates will rise in the future,” and forecasted, “Since the additional interest burden that had to be borne is now covered by financial institutions, it will be more meaningful for borrowers than before.”

Regarding concerns that support for vulnerable borrowers in the banking sector benefits only a few, he said, “We are basically monitoring the banks’ autonomous efforts for mutual growth,” but added, “In a market economy and capitalist system, based on the principle of personal responsibility, there are parts that can and cannot be supported.” He further explained, “Support from banks is also done while maintaining principles, so it inevitably results in targeted support rather than universal support.”

He refrained from commenting on how much he has been informed about abnormal foreign exchange transactions that surfaced at Shinhan Bank and Woori Bank, whether there is any involvement with virtual assets, and his views on rulings related to the Optimus fund.

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