Both Upper and Lower Limits of Mortgage Loan Interest Rates at the Five Major Commercial Banks Are Lower Than Those at Internet Banks
Commercial Banks Lower Additional Interest Rates While Internet Banks Move in the Opposite Direction
Internet banks, once known as "interest rate hotspots," have recently been found to offer less favorable interest rate benefits compared to commercial banks. Not only deposit interest rates but also loan interest rates have been confirmed to be cheaper at commercial banks. This is because, following the base interest rate cuts and pressure from financial authorities to lower loan interest rates, commercial banks have adjusted their additional interest rates, whereas internet banks have either maintained or even raised their additional interest rates. As a result, there are criticisms that internet banks, established with the purpose of realizing inclusive finance for low- to medium-credit borrowers, are focusing solely on interest rate profits.
According to the financial sector on the 17th, the deposit interest rates (1-year maturity) of internet banks were found to be lower than those of commercial banks. Comparing the deposit interest rates of the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) and internet banks, the highest rate was NH Nonghyup Bank's 'NH Hometown Love Donation Deposit' at up to 3.3%. The representative deposit products of internet banks, KakaoBank's 'KakaoBank Time Deposit' and K Bank's 'CodeK Time Deposit,' both had interest rates of 2.90%. This is lower than the 2.90?3.30% deposit interest rates of the five major commercial banks. Toss Bank also lowered its basic deposit interest rate from 1.50% to 1.20%, and its installment savings interest rate (for 12 months or more) from 3.00% to 2.80%. In particular, Woori Bank's 'WON Plus Deposit' offers both a basic and preferential interest rate of 2.95%, providing better interest benefits than internet banks.
KakaoBank explained on the 28th of last month that it lowered deposit and savings interest rates by up to 2.0 percentage points, stating, "Although the Bank of Korea's base interest rate has dropped by 0.75 percentage points since October last year, this is the first time in about six months that KakaoBank has adjusted its deposit interest rates," and that it was an unavoidable choice amid the interest rate reduction phase.
Loan interest rates were also found to be cheaper at commercial banks. The upper and lower limits of mortgage loan interest rates at the five major commercial banks were surveyed at 3.69?6.32%. In contrast, K Bank's rates ranged from 3.74?6.73%, and KakaoBank's from 3.69?6.63%, with both upper and lower limits higher at internet banks than at commercial banks.
The unusual reason why commercial banks offer better interest rate benefits than internet banks is that commercial banks have lowered loan interest rates in response to base rate cuts and regulatory demands to adjust additional interest rates, while internet banks have either maintained or even increased them.
In fact, Woori Bank lowered the additional interest rate on its 5-year variable mortgage loan (periodic type) by 0.25 percentage points starting from the 28th of last month. NH Nonghyup Bank also reduced interest rates on non-face-to-face mortgage loans and personal credit loans by up to 0.40 percentage points from the 6th of this month. Hana Bank lowered the additional interest rate on face-to-face mortgage loans (hybrid type) by 0.15 percentage points starting from the 10th. Shinhan Bank reduced mortgage loan interest rates for home purchase funds and living stabilization funds (limited to financial bond 5-year and 10-year benchmark rate products) by 0.10 percentage points from the 14th, and also lowered interest rates on seven types of credit loan products by 0.10?0.20 percentage points through the introduction of preferential rates.
On the other hand, K Bank raised the additional interest rate on apartment mortgage loans by 0.05?0.06 percentage points in January. This was about a month after it raised the additional interest rate on apartment mortgage loans in December last year. Additionally, K Bank also increased the additional interest rates on credit loans and overdraft accounts by 0.3 percentage points each.
Until now, internet banks have been competitive in terms of rent and labor costs compared to commercial banks, and based on this, they have provided better interest rate benefits. However, as the full-scale interest rate reduction phase has begun recently, net interest margin (NIM), which is directly linked to profitability, has declined, and it appears that they are focusing on defending this.
A financial sector official said, "It is true that the interest rate merits of internet banks have significantly decreased compared to the past," adding, "Especially for commercial banks, which receive high attention and are required to some extent to fulfill public responsibilities, they have no choice but to respond promptly to the financial authorities' demands to lower interest rates."
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