120,000 People Transfer Credit and Mortgage Loans... '3 Trillion' Large Movement

Refinancing Personal Loans + Mortgage Loans Hits 120,556 Borrowers, Exceeding 3 Trillion Won
Mortgage Loan Refinancing Applications at 16,297 Borrowers, Worth 2.9 Trillion Won
Average Interest Rate Reduction Range 1.55~1.60%
Jeonse Loan Refinancing Service Starts from the 31st
"120 Trillion Won of Jeonse Loans Eligible... Considering Extension of Period Restrictions"

Following the credit loan refinancing service, the number of financial consumers who have reduced their interest burden through the mortgage loan refinancing service has exceeded 120,000, with the total amount of refinanced loans reaching 3 trillion won. Starting from the 31st, the jeonse loan refinancing service will begin, and as the mortgage loan service expands to villas and officetels within the first half of the year, market attention is focused on the trend of service usage and the effect of promoting interest rate competition.

The 'Mortgage Refinancing' service through an online, one-stop refinancing infrastructure surpassed 10,000 applicants and approached 1.8 trillion won in application amounts within 15 days of its launch. The photo shows an ATM of a commercial bank installed in Yongsan-gu, Seoul, on the 25th. Photo by Jinhyung Kang aymsdream@

According to the Financial Services Commission on the 31st, as of the 9th, 120,511 borrowers have reduced their interest burden through mortgage loan refinancing, which began last year in May along with credit loan refinancing, with the total amount of loan transfers reaching 3.041 trillion won.

By service, as of the 26th, based on 14 business days, 1,738 borrowers completed the stages of loan screening, contract signing, and repayment of existing loans through the mortgage loan refinancing service, with the refinanced loan amount totaling 334.6 billion won. The total number of applicants was 16,297, with the requested loan amount estimated at 2.9 trillion won. Additionally, over the past eight months, 118,773 borrowers have used the credit loan refinancing service as of the 26th, with a total transfer amount of 2.7064 trillion won.

The average interest rate reduction was similar. The average annual interest rate reduction for the credit loan refinancing service and the mortgage loan refinancing service was 1.55 percentage points and 1.60 percentage points, respectively. In terms of amount, mortgage loans resulted in an annual interest saving of 2.98 million won, while credit loans saved 570,000 won annually.

As a result of refinancing at lower interest rates, borrowers' credit scores also improved. Mortgage loan borrowers' credit scores increased by an average of 32 points, and credit loan borrowers' scores rose by 36 points. In particular, as interest rate competition in the financial sector intensifies, cases of interest rate reductions for general new mortgage loans have been confirmed. Bank A lowered interest rates by 0.4 to 1.4 percentage points for general new mortgage loans starting from the 12th, and Bank B reduced rates by 0.15 to 0.4 percentage points from the 9th.

Shin Jin-chang, Director of the Financial Industry Bureau at the Financial Services Commission, explained, "As the loan refinancing service promotes interest rate competition in the financial sector, many banks have been confirmed to lower interest rates not only for existing loan refinancing but also for general new loans."

[Image source=Yonhap News]

Jeonse Loan Refinancing Service for 120 Trillion Won Targeted... Supplementing the 3 to 12 Months Post-Loan Limitation

Moreover, with the launch of the jeonse loan refinancing service starting today, more financial consumers are expected to benefit from reduced interest burdens. The target for the jeonse loan refinancing service is 120 trillion won out of the total 170 trillion won jeonse loans, excluding policy financial products or loans handled through agreements between local governments and financial companies.

Jeonse loan refinancing applies to all housing types, including apartments, villas, officetels, and detached houses, for guaranteed jeonse loans. Guaranteed jeonse loans refer to loans secured by guarantees from the Korea Housing Finance Corporation (HF), Housing and Urban Guarantee Corporation (HUG), or SGI Seoul Guarantee, applied for within three months from the earlier of the balance payment date on the lease contract or the resident registration move-in date.

However, to prevent excessive loan transfers between financial companies, refinancing is only possible after three months have passed since the existing jeonse loan was taken. Also, considering the guarantee product handling criteria of the existing jeonse loan guarantee institutions, refinancing is allowed only until half of the jeonse lease contract period has passed. Refinancing is also possible when renewing the jeonse lease contract. In this case, new loan applications can generally be made from two months before to 15 days before the expiration of the existing jeonse contract period, considering the timing of the lease contract renewal.

Through this jeonse loan refinancing service, borrowers can refinance existing jeonse loans obtained from a total of 21 financial companies into new jeonse loan products from 14 financial companies (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup, IBK Industrial Bank, Sh Suhyup, Busan, Daegu, Gyeongnam, Gwangju, Jeonbuk, Kakao, and K Bank). These 14 financial companies' own applications (apps) and four loan comparison platforms (Naver Pay, Kakao Pay, Toss, Finda) allow borrowers to check their existing jeonse loans and compare them with various financial companies' jeonse loan products.

The loan limit for jeonse loan refinancing is restricted to the 'remaining balance' of the existing loan. However, if the jeonse lease contract is renewed and the jeonse deposit increases, the new jeonse loan limit can be increased by the amount of the deposit increase within the guarantee limit of each guarantee institution. For example, if a jeonse deposit of 100 million won had a jeonse loan of 80 million won (80% guarantee limit), and the deposit increases to 120 million won upon contract renewal, the jeonse loan limit can increase up to 96 million won.

Meanwhile, the Financial Services Commission plans to gradually review measures to expand the period limitation of the jeonse loan refinancing service, which currently restricts refinancing to 3 to 12 months and 22 to 24 months after the loan. Director Shin stated, "This limitation arose because one of the three guarantee institutions (HUG) only allows subscription to the jeonse deposit return guarantee insurance before half of the contract period has passed. We will consider ways to allow refinancing even after half of the contract period has elapsed."