Minimum 1.9%... K-Bank Adam Loan Gains Popularity Through Word of Mouth (Comprehensive)

100% Non-Face-to-Face Adamdae, Gaining Popularity Through Word of Mouth
Loan Execution of About 100 Billion KRW Monthly
'Non-Face-to-Face, Convenience, Low Interest Rates' Increase Customer Satisfaction

Seo Hoseong, CEO of K Bank.

[Asia Economy Reporter Kim Jin-ho] K Bank, an internet-only bank, is experiencing a surge in popularity with its ‘100% Non-Face-to-Face Apartment Mortgage Loan (Adamdae)’ product. This is thanks to word of mouth spreading across real estate and financial investment communities amid signals of interest rate hikes in various places. The key to its popularity is analyzed to be the provision of the lowest annual interest rate in the 1% range.

According to the financial sector on the 24th, the cumulative loan amount of K Bank’s Adamdae, launched at the end of August last year, recently exceeded 700 billion KRW.

It took three months to reach a cumulative loan amount of 100 billion KRW after its launch, but the growth rate of K Bank Adamdae has been accelerating this year. It surpassed 400 billion KRW in February, 500 billion KRW in April, and 700 billion KRW in June, with loans being executed at a scale of about 100 billion KRW each month.

K Bank Adamdae is characterized by the use of income information scraping technology, allowing customers to check their estimated loan limit and interest rate and execute loans without issuing any additional documents. According to a K Bank survey, 44% of customers who took out Adamdae loans cited non-face-to-face service as an advantage, 38% pointed to convenience, and 14% expressed satisfaction with the low interest rates.

With a maximum limit of 1 billion KRW (for refinancing loans) and a minimum interest rate of 1.9% per annum, it is highly popular among borrowers who have existing mortgage loans. This is because refinancing can significantly reduce the monthly interest payments. For example, lowering the interest rate by just 0.5 percentage points from 3% to 2.5% on a 300 million KRW mortgage loan can save about 1 million KRW in interest annually.

According to statistics from the Korea Federation of Banks, the average interest rate for K Bank’s mortgage loans (installment repayment method) last month was 2.39% per annum. Compared to major commercial banks such as Hana Bank (2.97%), Woori Bank (2.91%), and NH Nonghyup Bank (2.81%), the interest rate difference was up to 0.58 percentage points.

Meanwhile, K Bank is considering expanding the Adamdae product, currently limited to refinancing loans, to individual mortgage loans as early as the second half of this year. It also plans to significantly expand its loan product lineup, including Saetdol loans for low- to mid-credit borrowers and Jeonwolse (monthly rent) loans.