Jeonse loan refinancing service kicks off
Government-backed mobile loan refinancing services were expanded on Wednesday to include jeonse loan products.
“Jeonse” is Korea’s unique rental payment system, under which a tenant pays a lump sum of money, usually amounting to over half of the house’s market price, at the start of a lease and gets the same amount returned at the end of the lease.
Out of the country’s total jeonse loan balance of 170 trillion won ($127 billion) provided by various lenders, 120 trillion won worth of products, excluding low-interest policy financial products or loans under agreements with local governments, are subject to the refinancing service.
The jeonse loan transfer service is now available on four fintech platforms, including Naver Pay, Kakao Pay, Toss and Finda, which provide loan comparison functions.
Financial consumers can utilize 14 different mobile banking apps as well, including Shinhan, Woori, Hana, NH NongHyup, Industrial Bank of Korea and more.
Through these mobile platforms, consumers can switch jeonse loans offered by 18 banks and three insurance
“Besides the effect of interest rate cuts from refinancing loans, there is also an effect of interest rate reduction led by banks themselves due to strengthened competition. ”
companies.
However, the service is only available for those whose lease hasn’t yet reached the first half of the entire lease period.
Financial authorities have led the launch of the mobile refinancing service, which is targeted for various loans, ranging from credit, mortgage and to jeonse loans now, to reduce the financial burden on households amid the rise of global interest rates.
According to the Financial Services Commission (FSC), the country’s top financial regulator, approximately 2.7 trillion won worth of refinancing in credit debt has been achieved during the past eight months since the service’s launch in May last year.
A total of 118,773 borrowers have switched their credit loans to other loan products with lower interest rates.
Mortgage loan refinancing service began on Jan. 9, and 16,297 borrowers applied to transfer loans within the first two weeks of the service’s launch, amounting to 2.9 trillion won.
“Besides the effect of interest rate cuts from refinancing loans, there is also an effect of interest rate reduction led by banks themselves due to strengthened competition,” an FSC official said.