Banks Raise Limits and Lower Interest Rates to Boost Household Loans

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[Asia Economy Reporter Sim Nayoung] Banks have launched a competition to lower interest rates and increase limits to secure household loan demand. This strategy comes as the outstanding balance of household loans at the five major banks has declined for three consecutive months.

According to the financial sector on the 10th, Hana Bank will raise the limit of its main credit loan product, Hana OneQ Credit Loan, from 150 million KRW to 220 million KRW for loan applications received after 5 p.m. on the 12th. This follows a 0.2 percentage point reduction in the product's additional interest rate, along with the increase in the limit.

Woori Bank has applied a special preferential interest rate of 0.2 percentage points on new mortgage loans and jeonse loans since the 21st of last month. Additionally, from the 11th, subscribers to the real estate platform app 'Woori Wonderland' who take out new real estate secured loans or jeonse loans will receive a 0.1 percentage point interest rate discount through coupon benefits.

KB Kookmin Bank lowered mortgage and jeonse loan interest rates by up to 0.45 to 0.55 percentage points starting from the 5th. Following this, Shinhan Bank and NH Nonghyup Bank also reduced interest rates on housing-related loans from the 8th.

In some banks, the spread between the final loan interest rate and the base interest rate has returned to the level before last year's full-scale loan volume regulation at the beginning of this month. Bank loan interest rates are determined by adding or subtracting customer-specific additional interest rates and preferential interest rates to the base interest rate.

Meanwhile, the outstanding balance of household loans at the five major banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) stood at 703.1937 trillion KRW at the end of last month, down 2.7436 trillion KRW from the end of February.

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