[2021 National Audit] Korea Housing Finance Corporation "Preparing 70% Reduction on Prepayment Fees for Policy Mortgages"

[Image source=Yonhap News]

[Asia Economy Reporter Park Sun-mi] Korea Housing Finance Corporation announced that it is preparing a plan to reduce the prepayment penalty on policy mortgages by 70%.

On the 21st, during the National Assembly audit, Choi Jun-woo, President of Korea Housing Finance Corporation, responded to a question from Kim Byung-wook of the Democratic Party of Korea regarding the plan to reduce the prepayment penalty, saying, "We are preparing a plan to temporarily reduce the prepayment penalty by 70% with the goal of encouraging existing borrowers to repay early," and "We plan to announce the details within this month."

At the same audit, Yoon Jong-won, President of IBK Industrial Bank of Korea, also said that they are "reviewing the reduction of prepayment penalties practically."

However, when Representative Kim suggested that the Financial Services Commission should incentivize commercial banks to abolish or reduce prepayment penalties, the financial authorities showed a cautious stance.

Ko Seung-beom, Chairman of the Financial Services Commission, mentioned the potential side effects of abolishing prepayment penalties and responded, "If the fees are abolished, there could be an incentive to operate products mainly with short-term variable-rate loans, and the rise in interest rates could shift the burden to consumers."