Toss Bank Resumes Loans, 'Loan Inquiry' Service Frequently Down for Two Days
Low Interest Rates and High Limits... Analysis of Pre-DSR Regulation Demand Surge Impact
The third internet bank, Toss Bank, scheduled to launch on the 5th, is drawing attention from the banking sector. Even before its launch, it announced the release of groundbreaking interest rate products, including the highest deposit interest rate in the banking sector at 2% per annum and a minimum loan interest rate in the high 2% range, causing tension not only among other internet banks but also among commercial banks. Especially as financial authorities tighten regulations on household loans, leading to rising loan interest rates and restrictions on loan limits, Toss Bank's announcement of unsecured loans with a maximum limit of 270 million won is expected to attract demand from so-called "loan refugees." The photo shows the Toss Bank headquarters in Gangnam-gu, Seoul, on the 4th. Photo by Hyunmin Kim kimhyun81@
[Asia Economy Reporter Kim Jin-ho] As the new year begins and major banks gradually open their loan doors, a large number of genuine loan demanders are flocking to the newly established internet bank, Toss Bank. It has attracted those in need of money by offering the lowest interest rates and the highest limits among all banks. In particular, it is analyzed that there is a considerable amount of 'speculative demand' from borrowers who want to secure loans in advance ahead of the strengthened borrower-level Debt Service Ratio (DSR) regulations.
According to the financial sector on the 3rd, the loan limit inquiry service of the Toss Bank application (app) was intermittently paralyzed from 11 a.m. on the 1st of this month until the 2nd. This was due to a large influx of genuine loan demanders, such as office workers trying to check their loan limits, following the full-scale resumption of unsecured loan operations that had been suspended since October last year.
In fact, on major financial and real estate communities, Toss Bank's unsecured loan products are gaining word-of-mouth popularity. This is because loans can be obtained more easily and quickly than at any other bank, with lower interest rates and higher limits. Toss Bank's unsecured loans boast an interest rate in the low 3% range per annum and a maximum limit of 270 million KRW.
Especially from the 1st to the 2nd of this month, being the last period to apply DSR Level 1, the demand to secure loans under more favorable conditions seemed to be greater. This means that speculative demand occurred as borrowers anticipated that loan thresholds would continue to rise this year following last year, and thus took out loans in advance while possible.
The strengthened DSR regulations, which are being implemented from this year, officially took effect on this day. Accordingly, those who executed loans between the 1st and 2nd of this month were subject to DSR Level 1, but loans executed from this day onward will be subject to DSR Level 2. DSR Level 2 applies a 40% DSR to borrowers with total loans of 200 million KRW or more. The notice on Toss Bank's loan limit inquiry service also specifies that limits may change from the 3rd due to DSR Level 2.
Toss Bank's unsecured loans are considered aggressive among borrowers, befitting a newly established bank. On major financial communities, it is easy to find reviews of loans exceeding one's annual salary. Interest rates are generally rated as moderate, mostly in the mid to high 3% range to 4%. It is confirmed that the low interest rates and high limits have definitely attracted genuine loan demanders.
Meanwhile, consumers hoping to take out loans this year are expected to find internet banks somewhat more advantageous than commercial banks. This is because internet banks are relatively free from the total household debt volume regulations. Major commercial banks appear to have raised loan thresholds even higher since the new year, including setting quarterly limits.
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