The financial authorities are easing total loan regulation rules for mid- to low-credit borrowers in the banking sector. The aim is to expand incentives for mid- and low-credit loans, encouraging funds to flow to lower-income households.
According to the financial sector on the 27th, the authorities have decided to exclude 70% of private mid-rate loans handled by banks from the total household loan calculation. This adjustment comes after the household loan total target was doubled as part of the August 13 real estate measures.
Previously, only 30% of the amount of private mid-rate loans was excluded from total loan management. For instance, if a bank issued a mid-rate loan of 10 million won, only 7 million won would be counted towards the household loan total. Under the new incentive expansion, only 3 million won will be counted this year, reflecting a 70% exclusion.
Earlier, the authorities had decided to fully exempt mid-rate loans from the second financial sector from total loan regulation limits. While savings banks previously excluded 80% of the increase and credit finance companies excluded 40%, starting this month, all second financial sectors, including mutual finance, will have a 100% exclusion rate.
The significant expansion of incentives for mid-rate loans is seen as a measure to lower the barriers for mid- and low-credit borrowers. Concerns had been raised that stricter household loan management could reduce financial accessibility for these borrowers, who are relatively more at risk of delinquency and default.
As the government strengthens its inclusive finance policy, banks have recently been launching credit loan products targeting mid- and low-credit borrowers.
Shinhan Bank launched the 'Super Sol (SOL) Mid-Rate Loan' on the 21st, aimed at mid- to low-credit borrowers in the bottom 50% of external credit scores (NICE·KCB). This non-face-to-face credit loan product offers a limit of 20 million won per person, with fixed interest rates ranging from 5.5% to 6.9%. Hana Bank also introduced the 'Hana OneQ Safe Mid-Rate Loan' in June, providing a fixed interest rate of 5.5% for individuals with credit scores in the bottom 50%.
KB Kookmin Bank plans to supply 1.53 trillion won in private mid-rate loans this year. Woori Financial Group also aims to provide 1.1 trillion won in mid-rate loans at the group level.
* This article has been translated by AI.
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