'Mortgage Loan Leader' KakaoBank Lowers Interest Rates for Regional Customers Who Find It Difficult to Visit Banks

A customer in their 50s living in Nonsan, Chungnam recently switched their mortgage loan from a mutual finance institution to KakaoBank. The interest rate this customer received from KakaoBank was around 3.733%, which was 1.92 percentage points lower than their previous rate.

On the 27th, KakaoBank analyzed statistics on mortgage refinancing customers by region and found that customers from other provinces, excluding the metropolitan area and major cities, received an average interest rate reduction of 1.38 percentage points through refinancing. This was higher than the average reductions for metropolitan area (1.32 percentage points) and major city (1.21 percentage points) customers. Additionally, in other provinces, customers from Gyeongnam and Chungnam accounted for 53%, more than half. The region with the largest interest rate difference for refinancing was Gangwon-do, with an average difference of 2.16 percentage points.

KakaoBank has expanded its mortgage loan sector with lower interest rates than commercial banks and is also lowering rates for provincial customers who have relatively less access to bank branches. KakaoBank’s mortgage loans can be fully processed online, from document submission to loan review and disbursement. A KakaoBank representative said, "Many customers from provinces, where bank branches are fewer and farther away compared to the metropolitan area, have benefited from lower interest rates." As the number of bank branches decreases annually, especially for customers in provinces, the distance and poor accessibility make it difficult to compare loan interest rates. According to the Financial Supervisory Service, as of the end of last year, the number of domestic bank branches (including branches and sub-branches) was 5,800, down about 909 from 6,709 in 2019.

Among KakaoBank’s provincial customers, the largest interest rate reduction applied was 2.415 percentage points lower than the previous mortgage loan rate. KakaoBank boasts competitive interest rates to the extent that even commercial bank employees use its services. According to the Bank Federation’s disclosure, the average interest rate for new mortgage loans issued by KakaoBank in May was 3.88% per annum, the only bank in the sector to record a rate in the 3% range. The average mortgage loan interest rates of the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?ranged from 4.25% to 4.62%. KakaoBank reported that by introducing mortgage loan interest rate discounts from February 22 to the end of June, it reduced customers’ annual interest burden by 25.2 billion KRW.

The number of refinancing customers switching to KakaoBank is also on the rise. Among KakaoBank’s new customers, the proportion of refinancing customers was about 28% at the end of last year but nearly doubled to 54% in the second quarter of this year. Customers who switched to KakaoBank’s mortgage loans saved an average of approximately 3.21 million KRW in interest annually, with interest rates averaging 1.3 percentage points lower than the average rate of their previous loans (5.1% per annum).

As KakaoBank emerges as a strong player in mortgage loans, competition among internet-only banks is intensifying. K-Bank recently lowered the variable interest rate on apartment mortgage loans by up to 0.38 percentage points. This reduction brought K-Bank’s refinancing variable interest rates down to a range of 3.80% to 5.76% per annum. Toss Bank is also preparing mortgage loan products, starting with the launch of jeonse and monthly rent loans in the second half of the year.

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