In response to warnings from politicians and financial authorities about ‘interest trading’, commercial banks are sparring to lower lending rates and raise interest rates on regular deposits and savings accounts.
From the 4th, Shinhan Bank decided to lower the interest rates on new mortgage loans and jeonse loans by up to 0.35 percentage points and 0.30 percentage points, respectively. It also decided to reduce the interest burden on vulnerable borrowers. As of the end of last month, the interest rate for vulnerable borrowers who use home mortgage loans at an interest rate of more than 5% per annum will be cut to 5% per annum for one year starting from the 4th. Shinhan Bank will bear the excess of 5%.
For the next two years, Shinhan Bank will also launch a Jeonse Fund Loan (two-year financial bond) product in which Shinhan Bank bears the risk of interest rate fluctuations for borrowers who use a cheonsei loan with an annual income of 40 million won or less and a cheonsei deposit of 300 million won or less. In general, for Jeonse loans linked to financial bonds, a variable rate of 6 months or 1 year is applied. The purpose of this time is to minimize the burden of an interest rate hike by applying a fixed rate of two years.
Nonghyup Bank has already lowered the housing-related loan interest rate by 0.1 to 0.2 percentage points from the 1st of this month by expanding preferential rates. Woori Bank also decided to give a preferential rate of 1.3 percentage points (within the bank’s own credit rating within the 7th grade) to all grades (8-10 grades added) at once from the 24th of last month, which was applied to fixed-rate loans based on 5-year bank bonds. On the 22nd of last month, K-Bank, an internet-only bank, also cut the loan interest rate by up to 0.41 percentage points.
Banks continue to raise interest rates on deposits and savings accounts. On the 1st, Shinhan Bank introduced special products, ‘Shinhan 40th Anniversary Festa Savings Savings’ and ‘Shinhan S Dream Term Deposit’. Festa Savings, which was launched with a limit of 100,000 accounts, is a 10-month free installment payment that is paid on a weekly basis and can be paid up to 300,000 won per month, with an annual maximum interest rate of 4.0%.
Nonghyup Bank also plans to launch a new term deposit product with an interest rate of 3% per annum, including a preferential interest rate of 0.4% point, in the near future.
By Park Jin-woo, staff reporter jwp@hankyung.com
