[1mm Financial Talk] Still Available... 'Refinancing Mortgage Loans at 3% Interest Rates'

In the Atmosphere of Rising Market Bank Interest Rates
K Bank Refinancing Loan Variable Interest Rate as Low as 3.69%

View of apartments in Seobu Ichon-dong from the 63 Building observatory. Photo by Hyunmin Kim kimhyun81@

Although mortgage loan interest rates at commercial banks are rising, some internet banks offer rates as low as the 3% range exclusively for those refinancing their mortgage loans. According to K-Bank, as of the 29th, the variable interest rates for refinancing loans ranged from 3.69% to 5.68%. K-Bank lowered its variable mortgage loan rates for refinancing purposes by 0.38 percentage points at the end of July, maintaining rates in the 3% range since then. At that time, rates were between 3.80% and 5.76%, so they have decreased slightly within a month.

On the 29th, the variable interest rates for internet banks (KakaoBank and K-Bank) and the five major banks (Kookmin, Shinhan, Hana, Woori, and NongHyup) were recorded at 4.05% to 6.95%, while fixed rates ranged from 3.83% to 6.7%. Considering only the lowest rates, K-Bank’s variable refinancing loan rates are the most competitive. K-Bank maintains its 3% range refinancing loan products to absorb demand for switching mortgage loans without increasing overall household loans in the financial sector.

Throughout this year, K-Bank’s refinancing loan rates have been set lower than new loan rates. From January to August, based on the lowest rates at the end of each month, they were 0.03 to 0.68 percentage points lower. As of the end of last month, K-Bank’s outstanding balance of apartment mortgage loans (for apartment purchase funds and living stabilization funds) was about 2.5 trillion KRW, half of which were refinancing loans.

K-Bank bases its variable refinancing loan rates on the 'New Balance COFIX.' The New Balance COFIX is calculated based on the interest rates of deposit products held by banks at the end of the month. It features less volatility compared to general variable rates that follow the 'COFIX'?which is calculated based on deposit interest rates over the previous month?or general fixed rates that are based on daily changing financial bond rates. The Financial Services Commission exempts existing mortgage customers who switch to products following the New Balance COFIX from regulations such as DSR (Debt Service Ratio), LTV (Loan-to-Value ratio), and DTI (Debt-to-Income ratio) within the balance range.

A K-Bank official explained, "First-time homebuyers often lack mortgage loan experience and prefer face-to-face consultations, which reduces accessibility to internet banks. On the other hand, those who have taken out loans before can easily refinance, so internet banks focus on strengthening their mortgage loan competitiveness by utilizing refinancing loans."

KakaoBank also offers interest rate benefits to customers refinancing their loans. Under the same conditions, refinancing mortgage loans are offered at rates 0.35 percentage points lower than new mortgage loans.