Brokerage houses lower borrowing rates to woo investors amid stock boom

Securities firms are concentrated in Seoul’s financial district of Yeouido, Dec. 24, 2025. Yonhap

Kim, a retail investor, says he is considering whether to switch to a different brokerage house offering a lower interest rate than his current brokerage, where he took out loans to invest in the bullish domestic stock market.

“Companies used to offer relatively similar rates, but increasingly they compete to offer better rates that are very tempting for small investors who use borrowed money to buy stocks and want to minimize interest costs,” Kim said, declining to provide further details.

Kim’s case highlights the growing competition among securities firms seeking to attract investors relying on brokerage loans to capitalize on gains during the accelerated rally of Korean stocks.

According to industry officials, Tuesday, brokerage houses charged interest rates of around 5 percent on margin loans, with borrowing periods varying by stock from 30 to 90 days.

Margin loans are secured, flexible loans from brokerages that allow investors to borrow money using existing stocks, bonds or cash as collateral.

Rates have been falling as the benchmark KOSPI reached an unprecedented 5,000 points, while the secondary bourse KOSDAQ surpassed 1,000 points for the first time in more than four years.

For customers who transfer their margin loan accounts from other brokerages, Hana Securities has set an annual interest rate of 3.9 percent through March 27, while Hanwha Investment & Securities will apply the same rate through March 31.

Woori Investment & Securities is offering a preferential annual interest rate of 3.9 percent on margin loans through Dec. 31 this year.

Meritz Securities has lowered the interest rate on short-term margin loans to 4.9 percent.

Industry officials speculate that the rate campaign will gain ground, as outstanding margin loan balances have been rising in line with increased domestic stock trading activity.

The balance surpassed 29 trillion won ($20.02 billion) for the first time on Jan. 20, up from around 27 trillion won at the end of 2025.

“This surge reflects heightened investor sentiment amid strong market momentum, which is likely to continue,” Jung Eui-jung, head of the Korean Stockholders' Alliance, said.

Some industry officials, however, expressed concern that reckless borrowing could create significant risks. Insufficient collateral may trigger forced liquidations, potentially resulting in substantial losses, they said.