The Financial Services Commission announced that the online loan transfer service will be available for mortgage loans for apartments and jeonse loans for all housing types, allowing borrowers to compare different rates online and make a switch to the one offering lower interest rates.
From May 31, 2023, the online loan transfer system’s service availability has been expanded to include individual credit loans. As of September 15, a total of 67,384 transfers have been made with the volume of loans reaching more than KRW1.58 trillion. On average, applicants received interest rate cuts of 1.5 percentage points, and their total annual saving in interest payments is estimated to be more than KRW30 billion. The borrowers who switched loans saw their credit scores increase, and there has been more competition between financial companies in lowering interest rates.
Based on these favorable outcomes, the authorities plan to expand the service availability to include home-backed mortgage loans for apartments and jeonse loans for all housing types. Previously, the process of switching a mortgage loan or a jeonse loan was ridden with inconveniences, as there were no sufficient loan comparison platforms and due to the hassle of having to visit multiple financial institutions.
To help remove these inconveniences, the authorities will develop an online loan transfer infrastructure for housing loans joined by about 19 loan comparison platforms and some 32 financial companies. Relevant information sharing between financial companies will take place to ensure a seamless loan transfer experience for consumers.
The loan transfer infrastructure for housing loans is expected to be set up by the end of 2023 and open to public in stages beginning in January 2024. The authorities expect that this will bring about more choices for financial consumers and open up new opportunities for financial companies and fintech businesses.