Property savings accounts get a fix

Banks are expected to introduce property accumulation savings accounts next week at fixed interest rates of as high as 3.5 percent for seven years.

According to the Financial Supervisory Service yesterday, nine banks including KB Kookmin, Woori and Shinhan have come up with a property accumulation savings account product with a seven-year fixed interest rate and recently reported product terms to the financial regulator. The product is targeted mainly at low-income households that wish to accumulate their property in a more stable financial environment. The accounts can be opened starting Monday.

The launch of the new savings account product comes after local banks introduced a property accumulation savings account in March for the first time in 18 years. The accounts offer fixed interest rates of 3.8 percent to 4.6 percent for the first three years, with variable interest rates for the final four years. But the popularity of the property accumulation savings accounts launched in March faded.

“It seems customers fear that the banks could lower interest rates after three years,” said an official from the Korea Federation of Banks. “In terms of the new product banks are launching. However, they offer a more stable environment as they have a fixed interest rate for seven years.”

BY LEE EUN-JOO [angie@joongang.co.kr]