Inevitable "Pace Adjustment" Amid Policy Pressure... Toss Bank's Mortgage Launch Timeline Remains Uncertain

Toss Bank Yet to Submit Terms and Conditions Review to Authorities

Facing Dual Pressures: Expanding Lending to Mid- and Low-Credit Borrowers and Household Loan Cap

Aggressive Marketing Difficult Amid High Interest Rates and Regulatory Stance

The timeline for Toss Bank to launch its home mortgage loan (jumdandae) products—which would make it the only domestic internet-only bank not to offer such loans—has once again become uncertain. This is due to tighter household lending regulations imposed by financial authorities, as well as mounting pressure on internet banks to expand lending to mid- and low-credit borrowers.

Toss Bank Headquarters in Gangnam-gu, Seoul. Photo by Jinhyung Kang aymsdream@

According to the financial sector on May 14, Toss Bank has not yet applied to the financial authorities for a review of the terms and conditions of its home mortgage loan products. This review, a mandatory step before launching any new financial product, typically takes one to two months. Since home mortgage loans are among the most fundamental banking products, once the review process begins, the launch is generally considered imminent.

Initially, Toss Bank had been preparing to launch its home mortgage loans in the first half of this year. The industry expected the application for review to be submitted early this year, but the process remains stalled. Toss Bank explained, "We are considering integrating new service features with our existing home mortgage loan products." The company is reportedly ready, having already selected a real estate price information provider, designed the product, and built the necessary infrastructure.

Home mortgage loans are a key initiative for Toss Bank to diversify its business structure. By moving away from a credit loan-centric portfolio, the bank can achieve greater diversification, and, given the nature of collateral-based lending, it also benefits from enhanced risk management. As of the end of last year, Toss Bank’s delinquency rate stood at 1.11%, higher than KakaoBank (0.51%) and K-Bank (0.60%).

However, recent regulatory pressure from financial authorities on internet banks poses a significant burden. Kim Yong-bum, policy chief at the Presidential Office, recently criticized internet banks for "cherry-picking" only prime customers and called for change. Kim emphasized, "Cherry-picking is not the mission of internet banks," and added, "They must clearly demonstrate what results they have achieved using their data."

Financial authorities are also consistently encouraging internet banks to increase lending to mid- and low-credit borrowers. An official from the financial authorities stated, "Internet banks were launched with the intent to play a different role from traditional banks," and continued, "Beyond simply meeting supply targets, more proactive efforts to support mid- and low-credit borrowers are needed."

In this environment, it is difficult for Toss Bank to rush the launch of mortgage loans focused on prime borrowers. The strict management of the overall household loan cap also acts as an obstacle. According to data submitted by the Financial Supervisory Service to the office of Democratic Party lawmaker Lee In-young, Toss Bank’s annual household loan growth target for this year is 505.2 billion won. The bank must operate both its existing credit loans and new mortgage loans within this cap.

As of the end of the first quarter, Toss Bank’s increase in household loans stood at approximately 37 billion won, leaving some headroom within the overall limit. However, there is consensus that it will be difficult to pursue aggressive marketing alongside the launch of mortgage loans. Normally, new products attract customers by offering low interest rates and exceptional benefits, but under the current lending cap, such expansion strategies are inevitably constrained.

A financial industry official commented, "It is difficult to design attractive benefits in a high interest rate environment, and given the nature of banking as a regulated industry, it would be extremely burdensome to go against the direction of the authorities." The official added, "In the end, new loan products must stand out to consumers in terms of rates or benefits, but in the current market environment, aggressive sales are not easy, leaving internet banks increasingly caught between the push to serve more mid- and low-credit borrowers and the need for sound risk management."

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