Banks Move to Lower Loan Interest Rates... KakaoBank Cuts Up to 0.7%P

KB-Woori-KaBank, Loan Interest Rate Reduction

[Asia Economy Reporter Yu Je-hoon] Following criticism of "interest profiteering," the banking sector, which has announced large-scale hiring expansions, has also begun lowering loan interest rates.

According to the financial sector on the 21st, KakaoBank decided to reduce the interest rates on unsecured loans and overdraft accounts by up to 0.7 percentage points starting today. As a result, the minimum interest rate for unsecured loans has dropped to the low 4% range, and the minimum interest rate for overdraft accounts has fallen to the 4% range.

Along with this, KakaoBank raised the maximum limit for unsecured loans from the previous 250 million KRW to 300 million KRW, and the maximum limit for overdraft loans from 200 million KRW to 240 million KRW.

A KakaoBank representative stated, "To ease customers' interest burdens during the period of rising interest rates, we have lowered rates and increased the maximum limits to provide broader financial benefits," adding, "We will continue to lead inclusive finance based on competitive interest rates and convenience."

The reduction in loan interest rates is not limited to KakaoBank. KB Kookmin Bank is also known to lower mortgage and jeonse deposit loan interest rates by up to 0.55 percentage points starting from the 28th. This marks the third consecutive month of loan interest rate reductions.

By product, KB mortgage loan interest rates (based on new balance CoFIX) will be reduced by up to 0.35 percentage points, and interest rates for KB mortgage jeonse deposit loans, KB jeonse security loans, and KB Plus jeonse deposit loans will be lowered by up to 0.55 percentage points.

Woori Bank also effectively lowered loan interest rates starting today by expanding preferential interest rates. In Woori Bank’s case, preferential rates for mortgage loans based on the new balance CoFIX 6-month variable rate were increased by 0.45 percentage points, and the 5-year variable rate mortgage loans were increased by 0.20 percentage points.

This competitive reduction in loan interest rates among banks is interpreted as a response to the financial authorities’ awareness that socially contributive measures that consumers can feel are necessary. On the 17th, Financial Supervisory Service Governor Lee Bok-hyun stated regarding the banking sector’s social contribution plan worth 10 trillion KRW, “What matters is not the golden calf three years from now, but the immediate need for a sip of water in our hands right now.”