Shinhan, SC First to lower interest rates for mortgage loans

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Shinhan, SC First to lower interest rates for mortgage loans

A promotional poster for a mortgage product is displayed outside a bank in Seoul on Jan. 2. [NEWS1]

A promotional poster for a mortgage product is displayed outside a bank in Seoul on Jan. 2. [NEWS1]

 
Shinhan Bank and SC First Bank, a Korean unit of Standard Chartered, have lowered their lending interest rates for mortgage loans.
 
Shinhan was the first bank in Korea to announce the move as it plans to lower the rate for its loan products between 0.05 and 0.3 percentage points.
 
SC First Bank will increase its preferential rate by 0.1 percentage point, which will translate into a reduction for borrowers.
 
Other banks will likely follow in the footsteps of the two lenders.
 
In the meantime, Korean banks are expected to somewhat loosen their criteria on extending loans to households and companies in the first quarter of 2025 following months of tightening, a survey by the central bank showed Tuesday.
 
The index gauging lenders' attitudes toward lending stood at minus 1 for the January-March period, up sharply from minus 27 the previous quarter, according to the poll of 203 financial institutions, including 18 banks, conducted by the Bank of Korea (BOK).
 
A reading below zero means that a majority of lenders will tighten lending standards.
 
Credit risks for borrowers, however, will likely remain high in the first quarter due mainly to still-high household debt and economic uncertainties, the poll showed.
 
Major lenders tightened lending rules from the second half of 2024 as financial authorities pressed them to do so to rein in surging household loans and rising housing prices in Seoul and some of its surrounding regions.
 
"Demand for fresh loans is projected to increase, particularly from companies, given unfavorable business circumstances," a BOK official said. "Banks are likely to ease lending rules for those who seek funds for living and businesses."
 
As of end-November, banks' outstanding household loans stood at 1.14 quadrillion won ($779.81 billion), up 1.9 trillion won from a month earlier.
 
The amount of fresh loans rose for an eighth consecutive month, though it logged the slowest on-month growth since March amid tightening regulations.
 
Corporate loans in November gained 2.2 trillion won from a month earlier to 1.33 quadrillion won, logging a slower increase compared to the previous month's 8.1 trillion won rise, government data showed.

BY PARK EUN-JEE, YONHAP [[email protected]]
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