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Mobile mortgage refinancing services debut
A demonstration of fianncial services provided via a mobile phone and a tablet PC / Yonhap
By Lee Kyung-min
Fintechs and online platforms operated by leading commercial lenders began providing mortgage refinancing services for apartments valued below 1 billion won ($762,700), financial authorities said Tuesday. Jeonse loan services are scheduled to commence on January 31.
Unique to Korea, jeonse is a housing rental system whereby tenants pay a lump sum refundable deposit instead of monthly rent for the term of the contract. Government-funded housing loans for low-income earners are excluded.
The authorities said the services will be available from 9 a.m. to 8 p.m. on weekdays. Borrowers can take pictures of necessary documents including housing purchase or jeonse contracts and submit them online. Elderly borrowers can visit bank branches in person.
Up to seven business days will be needed before a loan application is approved.
The new service will create high demand among borrowers seeking lower rates, as evidenced by a similar service launched for unsecured loans.
Over 105,600 borrowers refinanced a combined 2.37 trillion won in unsecured loans with low-interest lenders between May 1 and Dec. 31 of last year.
The drop in interest among borrowers who switched to lower rates averaged 1.6 percentage points, saving them 540,000 won a year each on average.
“Previously, it took a lot of money and time for borrowers to search for the right information, since most of them had to visit branches,” an industry official said. “However, the online refinancing services will make it much easier for financial consumers to compare loan conditions at the click of a button. If interest rates dip in the future, many more will be able to switch easily to lower rates.”
Currently, unsecured loans are approved in less than 15 minutes of application. But mortgages will need a few more days because loan officers have to review related financial and housing regulations in person.
Naver Pay launched a service whereby new mortgage seekers are able to compare borrowing conditions, including rates, period and fees for early payment.
The Naver subsidiary’s platform provides services encompassing real estate information and financial products recommendation borrowing rate comparisons reflecting user preferences.
Refinancing services will be available at online platforms operated by commercial lenders — Shinhan, Woori, Hana, NH Nonghyup, and state-run Industrial Bank of Korea as well as 10 financial firms, including Busan Bank, Kwangju Bank, K bank and Kyobo Life.
Kakao Pay and Viva Republica, the operator of Toss, launched a similar service in cooperation with 11 companies, including commercial lenders and life insurers.
The Financial Services Commission and the Financial Supervisory Service said outstanding mortgage loans came to 839 trillion won and jeonse loans 169 trillion won as of November last year. The per capita figures were 140 million won and 110 million won, respectively.