Over 3,800 People Switched Jeonse Contracts in Six Days... Saving 1.92 Million KRW Annually

It has been reported that more than 3,800 borrowers applied for refinancing at lower interest rates within just 6 business days since the launch of the Jeonse loan refinancing service. Borrowers who have completed the entire refinancing process so far received an average interest rate reduction of 1.35 percentage points (p), saving approximately 1.92 million KRW annually in loan interest.

On the 8th, the Financial Services Commission announced that a total of 3,869 borrowers applied for new loans during the 6 business days following the launch of the Jeonse refinancing service on the 31st of last month. The total amount of new loan applications was about 678.8 billion KRW. Among these, 370 borrowers have completed loan screening and signed loan agreements, with an application amount of 66.2 billion KRW.

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

Eight borrowers have completed all refinancing procedures, with their loan amount totaling approximately 1.1 billion KRW. They received an average interest rate reduction of 1.35 percentage points, saving about 1.92 million KRW per person annually in loan interest.

The authorities stated, "In the case of Jeonse loans, financial institutions must verify key factors during the loan screening process, such as the market price of the collateral property, the presence of senior liens, and the housing ownership status of household members, which are essential for mortgage loan screening. Additionally, they must confirm whether the borrower meets the guarantee subscription requirements of guarantee institutions and verify the authenticity of the lease contract related to the Jeonse loan." They added, "Loan screening completion and actual loan transfers are expected to occur in earnest after the Lunar New Year holidays, from the third week of February."

The mortgage loan refinancing service, which started on the 9th of last month, is also attracting many borrowers. As of noon the previous day, a total of 23,598 borrowers had applied for new loans. The total amount of their new loan applications was about 4.2 trillion KRW.

So far, 5,156 borrowers have completed the entire mortgage refinancing process, with the loan transfer amount totaling approximately 977.7 billion KRW. Borrowers who refinanced at lower interest rates received an average reduction of about 1.55 percentage points, saving 2.94 million KRW per person annually in loan interest. Their credit scores also increased by an average of about 25 points (based on KCB).

Meanwhile, the authorities plan to improve the loan refinancing services. First, the mortgage refinancing service currently operates only for loans secured by apartments, but it will be expanded to include loans secured by villas and officetels, for which real-time market price inquiries are available.

Additionally, they plan to review and discuss with participating institutions to allow the use of the mortgage refinancing service for balance loans where ownership registration under the borrower's name has been completed and the existing lending financial institution's mortgage lien has been established.

Regarding the Jeonse loan refinancing service, currently, refinancing is only possible before half of the lease contract period has elapsed. However, they plan to discuss with guarantee institutions to extend the refinancing period.

For the credit loan refinancing service, efforts will be made to improve user convenience. Currently, since the entire refinancing process is completed within 15 minutes in a one-stop manner, refinancing is only possible during financial institutions' business hours from 09:00 to 16:00. They plan to discuss expanding these hours to allow refinancing outside this time frame.