Korean Banks Cut Mortgage Rates by up to 0.5 Points
Major Korean banks lowered mortgage rates this week after government measures expanded lending limits.
Key points
- NH NongHyup and IBK cut mortgage rates by up to 0.5 percentage points this week.
- Government measures added 30 trillion won to the sector's total lending capacity in August.
- Five major banks exceeded their 7.11 trillion won annual loan growth target within one month.
South Korean banks cut mortgage rates by as much as 0.5 percentage points this week. This move follows new government regulations that expanded the overall lending capacity for financial institutions.
NH NongHyup Bank reduced its fixed-rate loan range to 5.11% to 6.77%. Industrial Bank of Korea also expanded its discount rates for long-term step-rate products to support homebuyers.
Regulatory shifts unlock new lending capacity
The government raised the annual household loan growth target in August. This decision created an additional 30 trillion won in lending space across the entire financial sector.
Chosunbiz reports that five major commercial banks exhausted their new lending capacity within one month. This rapid expansion forced institutions to review pricing strategies to stimulate demand for mortgage products.
Digital banks prepare new mortgage offerings
Toss Bank is currently testing a new mortgage product with its internal staff. The test includes villas and row houses, and formal launch procedures are expected to follow soon.
KakaoBank launched a balance-due loan for new unit sales with a maximum limit of 1 billion won. This product offers a forty-year term and waives the prepayment penalty entirely for borrowers.
Outstanding balances exceed annual growth targets
Outstanding household loan balances at five major banks reached 652.26 trillion won as of mid-July. This figure represents a 7.29 trillion won increase from the end of the previous year.
The banks had set a new annual growth target of 7.11 trillion won last month. They exceeded this specific target by nearly 200 billion won within just one month of the new rules.
