At the End of the Month, Mortgage Loan Approval Is Difficult Through Brokers
Visiting a Bank Branch for Consultation Is More Advantageous
It has been confirmed that Woori Bank is implementing loan limits for each loan brokerage firm this year as part of its household loan management strategy. As a result, at the end of the month, visiting a bank branch in person is considered more advantageous for getting a mortgage loan approved than consulting with a loan broker.
According to the financial sector on June 27, Woori Bank is managing the limit on new loan amounts handled by loan brokers on its own this year. If the new loan amount from a loan brokerage firm exceeds a certain threshold, the bank does not approve further loans from that broker. It is reported that some loan brokerage firms have already exhausted their quotas for July.
An official from the financial industry explained, "Since the bank sets limits for loan brokers to manage household loans, even if you meet the loan requirements, the likelihood of approval is low," adding, "Visiting Woori Bank in person and consulting at the branch is the most accurate way to find out whether your mortgage loan will be approved."
This is the reason why there have been complaints among mortgage loan applicants recently about the difficulty of getting consultations at Woori Bank. In the first half of the year, Woori Bank's loan interest rates were relatively lower than those of other banks. In February, Woori Bank increased the maximum preferential mortgage loan rate by 0.1 percentage points (from 1.0% to 1.1%) and implemented an additional 0.2 percentage point rate discount for households with three or more children.
In particular, Woori Bank made a surprise move by lowering the additional interest rate by 0.25 percentage points for new applicants of variable (cycle-type) mortgage loans. Previously, Kim Byunghwan, Chairman of the Financial Services Commission, had emphasized, "Loan interest rates are also a price, so market principles should apply," and pressured banks to lower their rates, saying, "From that perspective, it is now time for commercial banks to reflect the lowered base rates." Woori Bank was the first to take action in response.
An official from Woori Bank stated, "A 0.25 percentage point reduction in the additional interest rate is a significant cut," and explained, "Due to the impact of the rate reduction, loan demand surged, resulting in a larger increase in loans compared to other banks."
As a result, mortgage loan demand temporarily concentrated at Woori Bank. Looking at the growth rates of mortgage loans from January to May this year at the five major commercial banks, NH Nonghyup Bank recorded 5.6%, Woori Bank 2.4%, Shinhan Bank 1.6%, KB Kookmin Bank 1.4%, and Hana Bank 0.8%. Excluding NH Nonghyup Bank, which actively engaged in group loans, Woori Bank saw the largest increase among the major commercial banks.
However, there is a possibility that the growth in mortgage loans may slow slightly after July. A senior official at Woori Bank explained, "Since February, other banks have also lowered their additional interest rates, which has dispersed loan demand," and added, "Based on the mortgage loan trends in June, it is expected that the volume will not increase compared to the previous month."
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