[1mmGeumyungTalk] "Is This Possible? ... Half of KakaoBank Mortgage Loans Have Interest Rates in the 3% Range"

Half of New October Mortgage Loans Have Interest Rates in the 3% Range
No Broker Commission Fees in Non-Face-to-Face System and No Affiliate Broker Commission Fees
Refinancing Demand Surges, Increasing Limit and Interest Rate Inquiries
Current December Interest Rate is a Minimum of 4.31%

[Asia Economy Reporter Sim Nayoung] "I was skeptical about whether I could apply for and receive such a large amount worth hundreds of millions solely through an app, but when I thought of it as chatting with a chatbot or KakaoTalk and gave it a try, I was able to get a variable interest loan at 3.7% in times like these." Ban Wooyoung (39), who lives in Hawolgok-dong, Seongbuk-gu, Seoul, applied for a mortgage loan through KakaoBank in October and executed the loan on November 30. Ban said, "After checking mortgage loan rates on portals, I judged KakaoBank's conditions to be good," and evaluated, "The biggest advantages are no prepayment penalties and low interest rates."

During a period when interest rates are rising daily, KakaoBank and K Bank offered mortgage loans at a 3% interest rate. According to the mortgage loan interest rate segment handling ratio (new amounts in October, installment repayment method) posted by the Korea Federation of Banks on the 9th, the proportion of loans in the 3% range from KakaoBank and K Bank was overwhelmingly high.

KakaoBank's share of loans in the '3~under 3.5%' range accounted for 12% of total new loan amounts, and the '3.5~under 4%' range also accounted for as much as 35.30%. K Bank's respective segment shares were 7.94% and 27.85%. This contrasts with the five major banks (KB Kookmin, Shinhan, Woori, Hana, NH Nonghyup), where except for Shinhan Bank, mortgage loans in the 3% range were not found at all.

Why are internet banks uniquely offering such low mortgage loan interest rates? KakaoBank explained, "We have established a non-face-to-face process from consultation to execution, which reduces costs, and there are no agent commission costs or brokerage partnership fees," adding, "In September, we also lowered the mortgage loan spread by up to 0.85 percentage points (0.85 percentage points for variable rate products, 0.25 percentage points for mixed rate products), which had an effect."

As of the 8th of this month, KakaoBank's mortgage loan interest rates range from 4.31% to 6.09%. Although slightly higher than in October, they remain more than 1 percentage point cheaper than commercial banks. Currently, they are lowering interest rates (by 0.3 percentage points) for customers who chose non-grace periods and are also considering preferential rates for refinancing loans. A KakaoBank official explained, "Because the interest rates are low, word of mouth is spreading, and the proportion of refinancing is increasing."

In October, 31% of all new mortgage loans were for refinancing demand, amounting to 95.4 billion KRW. The demand for checking limits and interest rates also surged, with 106,630 inquiries in October (compared to 60,940 in the previous month), an increase of 75%. KakaoBank surpassed a balance of 1 trillion KRW as of the 7th, just 10 months after launching mortgage loans in February.

K Bank is also lowering spreads and securing customers with low interest rates to carry out aggressive initial marketing activities.