From the second half of the year, the upper limit on mid-interest rate loans in the secondary financial sector will be adjusted.
According to the financial sector on the 29th, the Financial Services Commission will adjust the ceiling on private mid-interest rate loan rates by reflecting fluctuations in funding costs, and apply this in the second half of this year.
Looking at the changes in the upper limits of mid-interest rate loans by sector, mutual finance will decrease from 10.5% in the first half of this year to 10.22% in the second half, down by 0.28 percentage points (p), and savings banks will be adjusted downward from 17.5% to 17.25%. However, capital companies remain the same at 15.5% for both halves, while cards will increase by 0.22 p from 12.25% to 12.47%.
The government has been operating the mid-interest rate loan system since 2016 to smoothly supply funds to middle- and low-credit borrowers and to alleviate the interest rate gap phenomenon. Private mid-interest rate loans are designed for individual borrowers in the lower 50% credit tier, and operate by providing incentives for non-guaranteed unsecured loans that meet the interest rate ceiling requirements by sector.
The Financial Services Commission adjusts the ceiling on private mid-interest rate loans every half year according to the fluctuation in funding costs. For mutual finance and savings banks, the funding cost is the weighted average interest rate of new one-year term deposits two months prior to the rate change date. For cards and capital companies, the funding cost is the weighted average of the funding cost on total borrowings in the previous quarter and the newly issued asset-backed securities interest rate at the end of two months prior.
The upper limit on private mid-interest rate loans by sector is set at '+2%p' compared to the private mid-interest rate requirement for mutual finance and cards, and '+1.5%p' for capital companies and savings banks.
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