Korean Banks Charge Higher Rates for Loan Refinancing Than New Loans
- Major South Korean commercial banks are charging higher average interest rates on refinanced mortgage and credit loans than they do on newly issued loans, according to data released...
- The widest gap appeared at iM Bank, where the average refinancing rate reached 7.17 percent compared to 4.84 percent for general new mortgages, creating a difference of 2.33...
- Woori Bank reported an average refinancing mortgage rate of 4.71 percent, which exceeded its new loan rate by 0.37 percentage points.
Major South Korean commercial banks are charging higher average interest rates on refinanced mortgage and credit loans than they do on newly issued loans, according to data released on September 27 by the office of People Power Party Representative Park Sung-hoon from the National Assembly’s Political Affairs Committee. Financial Supervisory Service records covering July show that 11 out of 16 banks offering mortgage loans priced their refinancing products above standard new loan averages.
Mortgage Refinancing Disparities Across Banks
The widest gap appeared at iM Bank, where the average refinancing rate reached 7.17 percent compared to 4.84 percent for general new mortgages, creating a difference of 2.33 percentage points. Jeonbuk Bank, Jeju Bank, Busan Bank, and Suhyup Bank also recorded gaps ranging between 0.39 and 0.53 percentage points. Among the five major commercial lenders, Hana Bank, Woori Bank, and NH Nonghyup Bank exhibited the same pattern.
Woori Bank reported an average refinancing mortgage rate of 4.71 percent, which exceeded its new loan rate by 0.37 percentage points. NH Nonghyup Bank and Hana Bank followed with differences of 0.24 percentage points and 0.18 percentage points, respectively. These figures indicate that borrowers switching lenders to secure better terms often face higher pricing despite similar underlying collateral and credit profiles.
Credit Loan Refinancing Penalties
The higher pricing trend extends beyond real estate to unsecured credit products, with 10 out of 16 lenders posting elevated refinancing averages. Gwangju Bank recorded the largest credit loan gap at 1.29 percentage points, closely followed by Toss Bank and Busan Bank at 1.22 percentage points each. Among the five major banking groups, only Woori Bank avoided the pattern for credit products, while Hana Bank, KB Kookmin Bank, Shinhan Bank, and NH Nonghyup Bank charged more for refinanced credit lines.
Such consistent divergence across multiple institutions suggests that loan pricing models factor in whether an applicant is switching from a competing institution. If banks apply higher rates solely because an application is classified as a refinancing request, consumers possess room to negotiate lower actual rates.
Broader Market Impact and Savings
Data from the Financial Services Commission show that approximately 420,000 customers moved 22조8천억원 규모의 대출 in debt to new lenders through the end of 2025. These consumer moves lowered average borrowing costs by 1.44 percentage points and reduced annual interest burdens by 169만원 per person.
