15,000 Mortgage Refinancing Applications Received at 5 Major Banks
3% Lowest Interest Rate with "Brokerage Fee Payment" Event Included
It is reported that demand for refinancing jeonse loans through the debt refinancing infrastructure has exceeded 160 billion KRW at major commercial banks in just two days. The popularity of 'refinancing' has sparked competition among banks to attract customers.
According to the financial sector on the 4th, the five major banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) received 810 applications for jeonse loan transfers via non-face-to-face services from the 31st of last month to the 1st of this month. The total application amount over two days was approximately 164 billion KRW, with an average application amount of about 200 million KRW per case. Since the loan screening process has just begun, the refinancing execution has not yet taken place.
The five major banks (KB, Shinhan, Hana, Woori, NH Nonghyup) received a total of 810 loan transfer applications from the 31st of last month, when the jeonse loan refinancing service started, until the 1st of this month. [Photo by Yonhap News]
The debt refinancing infrastructure, which allows customers to easily switch to loans with lower interest rates online, started with unsecured loans last year, expanded to mortgage loans on the 9th of last month, and further extended to jeonse loans, a major housing finance product for low-income and non-homeowners, on the 31st of last month.
Refinancing jeonse loans is subject to stricter conditions than unsecured or mortgage loans, such as being eligible only after three months from the original loan application. This is because most involve guarantee institutions and require consideration of lease contracts. Eligible jeonse loan refinancing targets are guaranteed jeonse loans secured by guarantees from Housing Finance Corporation (HF), Housing and Urban Guarantee Corporation (HUG), and SGI Seoul Guarantee.
Nevertheless, the average daily application amount at the five major banks is 82 billion KRW, which is not significantly different from mortgage loan refinancing (105.6 billion KRW). The surge in applications appears to be due to the interest rate advantage.
On the 2nd, the lowest interest rates for jeonse loan refinancing (6-month variable rates) at Shinhan, Hana, Woori, and NH Nonghyup banks ranged from 3.65% to 3.97% per annum, while KB Kookmin Bank offered a fixed rate of 3.46% per annum as the lowest rate without a separate refinancing product. These rates are more than 1 percentage point lower than the average jeonse loan interest rates (4.7% to 5.45% per annum) at the end of last month, as disclosed by the Banks Association.
The loan acquisition performance varied significantly among banks. The gap between the bank that attracted the most jeonse loan refinancing (122.5 billion KRW) and the bank that attracted the least (1.2 billion KRW) in the first two days exceeded 100 times.
Banks are actively launching various events to attract transferring customers. Internet banks such as KakaoBank and K Bank have jumped into customer acquisition by offering interest rates in the low 3% range and waiving early repayment fees.
KB Kookmin Bank is offering up to 300,000 KRW in ‘KB Bok (福) Points’ to all customers who refinance through the KB Star Banking application by April 3rd. Shinhan Bank is providing points equivalent to up to 200,000 KRW for the first month’s interest to the first 500 customers, and Hana Bank is waiving stamp tax for the first 2,000 customers.
The volume of mortgage loan refinancing applications at the five major commercial banks, which started earlier, reached 14,783 cases (2.5 trillion KRW) from the 9th of last month to the 1st of this month. The average application amount per case was about 170 million KRW.
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