Change your home loan with an app, 1,000 trillion won household loan ‘Money Move’ in full swing

Easily change mortgage loans, expand online and one-stop refinancing loans
From comparing low interest rates to transferring non-face-to-face without visiting a branch.
As a result of operating the credit loan refinance loan infrastructure, interest savings of KRW 509 billion were achieved
대환대출 인프라 구조도/출처=금융위원회

A full-fledged money movement in the 1,000 trillion won household loan market is expected to begin. This is because the online refinance loan service, which was previously only available for credit loans, has been expanded to include apartment mortgage loans and jeonse loans. Financial authorities are expecting a reduction in loan interest rates and a reduction in housing costs for borrowers through market competition.

Mortgage loan and jeonse loan from the 9th and 31st, respectively

According to the Financial Services Commission on the 8th, apartment mortgage loans can be transferred to the refinancing loan platform from the 9th and jeonse loans from the 31st. Previously, it was possible to switch between a home loan or a jeonse loan, but the interest rates of various financial companies could not be compared at a glance, so financial consumers had to visit multiple branches in person to receive a loan with more favorable conditions. The size of the refinancing loan market is expected to expand further if switching between main and jeonse loans is supported through the refinancing loan infrastructure. According to the Bank of Korea, as of the third quarter of last year, the total mortgage loan balance was KRW 3 trillion, of which the deposit bank mortgage loan balance was KRW 1,049 trillion.

Loan products that can be replaced include apartment mortgage loans worth 10 billion won or less and guaranteed jeonse loans secured by apartments for which market prices can be inquired. However, in order to prevent excessive loan transfers, the mortgage for an apartment is changed from 6 months after receiving the existing loan, and for the jeonse loan, it is changed after 3 months until half of the jeonse lease contract period expires (2 year in the case of a 1-year contract). You can ride it.

When renewing a jeonse contract, the loan can be changed from 2 months before maturity to 15 days before maturity. In addition, in the case of a jeonse loan, it must be switched to only a guaranteed loan from the same guarantee institution that provided the loan guarantee for the existing loan. For example, a borrower who received a loan guaranteed by Korea Housing Finance Corporation (HF) can only switch to a HF guaranteed loan product. However, it is difficult to expect real-time, one-stop service at the same level as credit loans, which can complete a refinancing loan in about 15 minutes. This is because, in the case of home loan or jeonse loan, financial company employees need to verify documents for more than 2 to 7 days to directly check the housing price, guarantee requirements, lease agreement, loan regulations, and related documents.

Seven loan comparison platforms and 7 financial companies (34 apartment mortgages, 32 jeonse loans, excluding duplicates) participate in the apartment mortgage loan and jeonse loan refinancing loan infrastructure. Financial authorities have made it mandatory to verify loan product comparison and recommendation algorithms so that loan comparison platforms can recommend products that are advantageous to borrowers, and to ensure that loan comparison platforms do not pass on brokerage fees received from financial companies to financial consumers, the brokerage fee rates for each platform are posted on the website. I was told to do it. In addition, to prevent the expansion of the use of the refinancing loan infrastructure from acting as a factor in increasing household debt, the amount cannot be increased and replaced, and the limit of new loans is limited to the remaining amount of the existing loan.


Financial authorities expect effects of promoting market competition and lowering interest rates

Financial authorities expect that borrowers will see a de facto interest rate reduction effect through the expansion of products applying this refinancing loan infrastructure. This is because, in the case of home mortgage loans, which have a larger loan size than credit loans, even a small difference in interest rates can be a factor in moving because the interest savings are large.

As a result of operating the credit loan refinance loan infrastructure for 5 months from May to December last year, it was found that a total of 12 borrowers moved to low-interest loans. The total amount of transfer is approximately KRW 7 trillion, and the financial authorities analyzed that borrowers who changed saw an average interest rate drop of 10 percentage points and interest savings of KRW 5,696 per person per year (total of KRW 2 billion). Credit scores also increased by an average of 3,778 points (based on KCB).

In addition, as loan products with lower interest rates are already being released, it is expected that this will have the effect of promoting healthy competition in the financial sector. In the meantime, each financial company has expanded competition to attract loan customers. Accordingly, the number of financial companies where you can compare and select loan terms on the loan comparison platform has increased compared to the beginning. In addition, since the establishment of the refinancing loan infrastructure, major banks have been continuously increasing the supply of new and refinancing loan products with lower interest rates to increase interest rate competitiveness. The number of financial companies on each platform doubled from 6 in June last year to 26 as of December last year.

However, some predict that the burden of early repayment fees will be a hindrance. In response to this, an official from the Financial Services Commission said, “Compared to the past, the interest rates for mortgage loans and leasehold loans are somewhat higher, and considering the early repayment fees incurred during refinancing, the situation is not in a situation where refinancing loans can be actively generated.” However, financial companies are customers. “It is significant that conditions have been created to stimulate competition in the financial sector, such as by launching products with lower interest rates to attract more people,” he said.

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