New home loan offers money backStandard Chartered Korea introduced a new mortgage loan yesterday that enables borrowers who also open a deposit account to enjoy considerably better interest rates on their savings.
The product was launched as the government is pressuring financial firms to curb their fresh loan issuances in order to reel in snowballing levels of credit card spending and unpaid installment plans, which together hit a record 900 trillion won ($796 billion) at the end of last year.
The new mortgage sees customers earn more money on their deposits by raising the interest rate paid out by the bank to the same level as that being charged on their mortgage.
“This product is already becoming very popular in Singapore and Hong Kong,” said Kim Moon-ju, a senior general manager for secured loans at Standard Chartered Korea.
“We are not trying to encourage more people to take out mortgages; we are just offering bigger savings on interest payments to clients who would probably have applied for one anyway.”
Kim stressed that demand for fresh loans has not abated despite government measures to put a lid on growing debt.
The total amount of household debt stood at 453.6 trillion won in 2011, and financial companies recently submitted their lending plans to show how they would keep growth at 5.4 percent this year, excluding credit card spending and installment payments. This would mean an extra 24.5 trillion won in loans for 2012.
When calculated separately, mortgages are expected to grow at a slightly higher rate of 5.5 percent.
Although the proposed figures remain within the government’s unofficial cap of 6 percent this year, it still represents the largest rate of growth since 2008.
By Lee Ho-jeong [firstname.lastname@example.org]
More in Finance
Stocks dip more than 2 percent as investors book profits from recent rally
BOK head expresses concerns over rapid growth of local stock market
BOK keeps base interest rate at record low of 0.5%
Gov't-backed loans offered to all small shops from Jan. 18
Retail investor funds up ￦20 trillion already this year