"If You Apply Early, Are You Exempt from Regulations?"... The Surge of Broker Circumvention Loans

Popularity of Broker Loans Amid Regulatory Restrictions and Interest Rate Hikes
Unexpected Sales Boom as Brokers Increase Contracts
"2% Fixed Rate Mortgage" Also Offered as a Bold Proposal
Beware of Illegal and Fraudulent Activities Such as Registration Number Checks

Kim Ji-hyung (34, pseudonym), who lives in Mapo-gu, Seoul, was looking into jeonse loan options for his upcoming move when a friend advised him that going through a loan broker would be advantageous. He was tipped off that if he simply requested the broker to submit the loan proposal in advance, the loan would not be subject to future financial regulatory measures. Worried about a potential reduction in his loan limit, Kim consulted with his landlord and then met with the broker to apply for the loan two months earlier than his planned moving date.

[Asia Economy Reporter Song Seung-seop] Amid tightening household loan regulations by financial authorities, which have already raised the bar for loans at commercial banks, additional regulations have been announced, drawing attention to loans through brokers as a kind of 'niche market.' This is because brokers exploit regulatory blind spots that ordinary people find hard to detect, attracting those in need of funds with relatively low interest rates and generous loan limits. The practice of obtaining loans ahead of the desired time through such indirect methods has even become secretly popular.

According to financial circles and industry sources on the 21st, loan contracts through brokers have recently been noticeably increasing. This is due to a surge in consumers seeking loan consultations amid regulatory tightening and interest rate hikes. Industry insiders commonly explain that contract performance in the past month has increased two to three times compared to usual.

A loan broker refers to counselors and recruiting corporations who enter into business consignment contracts and perform loan-related tasks for financial companies. They handle applications, consultations, submission, and delivery, including online loans via the internet.

Offering Shockingly Low Interest Rates in the 2% Range... "Beware of Illegal and Fraudulent Practices"

Brokers often frequent online financial and real estate communities, approaching members who post loan-related consultation requests by sending messenger links. Their target customers are high-credit borrowers with sufficient financial capacity but increased interest burdens due to rate hikes. This contrasts with past business methods that connected low- and medium-credit borrowers to secondary or tertiary financial institutions. They mainly guide loans through some commercial banks or regional banks that still have remaining loan limits.

The conditions are also exceptional. Broker A stated, "Even multi-homeowners or owners of high-priced homes can receive jeonse loans up to 2 billion KRW regardless of DTI (Debt-to-Income ratio)," adding, "The lowest interest rate is 3.5% per annum (6-month variable basis), and loans can cover up to 80% of the deposit." Broker B promoted, "I can introduce a 5-year fixed-rate mortgage product with a minimum rate of 2.99%. The maximum grace period is up to 35 years, and even with a 1-year grace period, the interest rate remains the same."

There were also cases of guiding somewhat crafty loans. It was explained that if a loan proposal is submitted to the bank in advance through a broker, the loan execution after new regulations are introduced will not be retroactively applied. Various communities share methods of 'applying for loans in advance.' Broker C proposed, "The bank's criteria for new loans are based on the application date, not the execution date," and added, "I can prepare the loan proposal up to three months in advance."

As broker-linked loans become popular, warnings have been issued to be especially cautious of illegal and fraudulent operators. According to current law, loan counselors cannot charge customers fees, nor can they perform post-management tasks such as debt collection or loan interest receipt. To prevent damage, it is necessary to verify the broker's registration information beforehand and meet them in person to confirm their identity.