South Korean Banks’ Loan Interest Rate Reduction ‌Acceptance Varies

SEOUL (AP) — Acceptance ‍rates for household loan interest ‌rate reduction‌ requests, known as “Han⁤ Upon Rights,” varied significantly among South Korea’s five major commercial banks last year. Data released by the Korea Federation of Banks reveals that, on average, only ‍about 32% ‍of applicants seeking lower interest ‍rates from KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup Bank were accomplished.

Acceptance​ Rates and Request Process

The average acceptance rate for these​ “Han Upon Rights” applications across the five banks was 31.6% in the latter ⁣half ⁤of the year, a slight decrease from 33.6% in the first half, resulting in an annual average of 32.7%. This system allows ‍borrowers to request a reduction ⁢in their loan interest rate if their creditworthiness improves due to factors such as employment, promotion, or increased income.

Applicants can apply for these interest‌ rate adjustments through bank branches or via mobile applications. The non-face-to-face application process allows for submission of required documents through data scraping, eliminating the need for physical paperwork.

Financial institutions are required to‌ notify applicants of their decision, ⁣including the reason for acceptance or rejection, within 10 business days. Acceptance hinges on an advancement in the bank’s internal credit‍ rating assessment of the borrower.This‌ assessment considers factors such‌ as loan and credit card transaction history, delinquency amounts, annual income, and overall financial​ assets. Banks may reject applications based on their evaluation results.

Increased Application Volume

The⁣ number of applications for interest rate‍ reductions continues to rise. Last year, the five banks received a total of 778,901 applications for household loan‌ interest rate adjustments, an ​increase of 28,366 ⁢compared to the previous year’s 750,535 applications. This surge suggests that ⁣despite ​the challenges in securing lower rates, borrowers are‌ increasingly seeking ways to alleviate their ⁤interest burden. The ease of applying through mobile apps without​ visiting a bank branch is highly likely⁤ contributing to this increase.

Bank-Specific Acceptance Rates

NH Nonghyup ⁣Bank recorded the highest‌ acceptance rate for household‌ loan interest rate reduction requests last year, approving 34,588 out of 72,253 applications, a rate of 47.9%. Shinhan Bank followed with an acceptance rate ⁢of 45.3%, while Hana Bank and woori Bank reported rates of 28.7% and 28.3%, respectively. KB Kookmin Bank had the lowest acceptance rate at 22.5%.

Total Cases and Interest Reduction Amounts

In terms ‌of the total number of applications approved, Shinhan Bank ​accommodated ⁣82,969 out ⁢of 183,455 cases, followed by Woori Bank (64,730 cases),‍ KB Kookmin Bank (44,230⁤ cases), nonghyup Bank (34,588 cases), and ‌Hana Bank (32,427 cases). Shinhan Bank also provided the largest ⁣annual interest reduction amount, totaling ₩10.689 billion. Hana Bank followed with ₩5.752 billion, Woori Bank with⁣ ₩5.228 billion, ⁤Kookmin Bank ⁢with​ ₩3.38 billion, and‍ Nonghyup Bank with ₩2.76 billion.

Average Interest Rate Reduction

the average interest rate‌ reduction was the largest at Woori Bank, at 0.45 percentage points per year. Nonghyup Bank followed with 0.33 percentage points, Kookmin Bank with 0.24 percentage points, Shinhan Bank with 0.21 percentage points, and Woori Bank with 0.17 percentage points.