According to the Korea Federation of Banks on the 10th, the average interest rate for new housing mortgage loans from the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) was 4.25% to 4.46% as of the end of November. Just a month earlier, in September, there were even two banks (Shinhan and Woori) with average rates in the 3% range, but now all have entered the 4% range. Considering that the average interest rate for new housing mortgage loans from the five major banks was 3.31% to 3.79% in July, when household loans began to surge, this represents an increase of up to 1 percentage point in just three months.
Woori Bank had an average new housing mortgage loan rate of 3.31% in July, which soared to 4.25% in October, marking the largest increase. Assuming a borrower took out a loan of 200 million won secured by a house with a 30-year equal principal and interest repayment method in both July and October, the difference in monthly repayment interest would exceed 100,000 won after three months.
The five-year cyclical products, which account for most of the housing mortgage loans, calculate the final interest rate by adding an additional interest rate to the financial bond rate. Comparing the financial bond rates from July to October, they have significantly decreased. The financial bond rate for five-year bonds was 3.4733% on July 1 and 3.3105% on October 31. Looking solely at the financial bond rate, it has dropped by more than 0.1 percentage points in three months. It is estimated that the Bank of Korea's Monetary Policy Committee's decision to lower the base rate by 0.25 percentage points in October also had an impact. Banks, tasked with the 'mission' of curbing loan demand, have set high additional interest rates, leaving consumers with little benefit from interest rates on housing mortgage loans, which make up the largest portion of their loans.
The tightening of loans is expected to continue until the end of the year, as banks must adhere to the household loan management targets set at the beginning of the year. However, as the Bank of Korea lowered the base rate in both October and November, market interest rates have temporarily decreased, and the interest rates for various loan products from banks have also lowered compared to November. Shinhan Bank's five-year cyclical housing mortgage loan product had a lower interest rate in the 4% range until November, but has dropped to the high 3% range in December.
However, many commercial banks have completely locked their non-face-to-face channels, which are typically easier for obtaining loans, until the end of the year, and some have raised the credit score requirement for loans to over 950 points, making it more difficult to obtain loans. Banks are also indicating that they will manage household loans as conservatively as possible next year.
Given the situation in the first-tier financial sector, even high-credit borrowers are flocking to second-tier financial institutions.
According to the Korea Savings Bank Association, the proportion of high-credit borrowers in savings bank loan products has increased. SBI Savings Bank, the largest savings bank in the country by assets, is a prime example. Last month, the proportion of new loan amounts issued to borrowers with credit scores exceeding 900 points was 45.22%. In August, just before the application of the second-stage stress total debt repayment ratio (DSR), this figure was 38.49%, indicating an increase of about 7 percentage points in three months.
The increase in the proportion of high-credit borrowers in savings bank loans is due to the first-tier financial sector raising its loan barriers. Borrowers who cannot obtain the necessary loans from commercial banks are turning to savings banks for relatively higher interest loans.
[Reporters: Park In-hye / Park Chang-young]
