The South Korean government's stringent household loan management continues, with the 'Living Stabilization Loan' from savings banks gaining attention for its higher subscription rates compared to standard credit loans. This product is particularly appealing to low to mid-credit borrowers in need of immediate funds.
According to the loan comparison platform Finda, the subscription rate for SBI Savings Bank's Living Stabilization Loan reached approximately 60% from the product's launch on June 29 to July 13. The subscription rate refers to the percentage of loan applicants who successfully complete the loan agreement after undergoing a review process. By credit score, the subscription rates are 46% for those in the 800s, 54.8% for the 700s, 57.6% for the 600s, and 47.4% for the 500s, with the highest rates observed among borrowers in the 600-700 range.
This rate significantly exceeds that of standard savings bank credit loans during the same period. The average subscription rates for standard savings bank credit loans are only 12.4% for the 800s, 16.7% for the 700s, 18.2% for the 600s, and 22.5% for the 500s. Notably, the subscription rate for the Living Stabilization Loan among borrowers with credit scores in the 600-700 range is about three times higher than that of standard credit loans.
The Living Stabilization Loan allows borrowers to access up to 10 million won without income restrictions, targeting those with a NICE score below 889 or a KCB score below 875. The interest rates range from 5.9% to 15.27%, with the highest rate being 1.24 percentage points lower than existing mid-interest loans. Currently, six savings banks, including KB, OK, SBI, Shinhan, Yegeoram, and Korea Investment Savings Bank, offer this product, with plans for major banks and specialized credit finance companies to begin offering it in the second half of the year.
Following the household loan management measures introduced on June 27 last year, which limited credit loan amounts to 100% of annual income, concerns arose about the difficulties faced by vulnerable borrowers in securing funds. In response, the Financial Services Commission introduced this loan as part of its efforts to expand inclusive finance.
Industry analysts suggest that as access to standard credit loans becomes more challenging for low to mid-credit borrowers due to stricter regulations, many are turning to the Living Stabilization Loan. Additionally, borrowers must agree not to purchase property in regulated areas for one year or until full repayment, indicating that the product is likely being utilized by those with genuine financial needs.
An industry representative stated, "Since this product targets borrowers in the lower 50% of credit scores, it aligns well with the existing customer base of savings banks. It appears to alleviate some financial difficulties for the working class, allowing them to borrow without regard to income within the 10 million won limit."
* This article has been translated by AI.
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