Recently, the interest rate spread between deposits and loans at internet banks has nearly doubled compared to commercial banks. Until now, internet banks have had a high proportion of loans aimed at low- to mid-credit borrowers, leading to already high loan interest rates. This is interpreted as a result of the authorities not being able to lower loan interest rates on loans such as mortgage loans or jeonse loans due to household loan management reasons. Although internet banks have been lowering loan thresholds since the beginning of the year, reducing loan interest rates does not seem easy.
According to the Bank Federation on the 13th, the interest rate spread between deposits and loans for internet banks, excluding policy household finance, was found to be between 1.40% and 2.48% points as of last November. The five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) had a spread of 1.00% to 1.27%, indicating that the spread at internet banks was twice as high.
However, the situation was different at the beginning of last year. In January of last year, Kakao Bank's interest rate spread was 0.67% points, and K Bank was at 0.58% points. There were cases where the gap widened close to 1.5% points in just 10 months.
Internet banks have been handling loans for low- to mid-credit borrowers at a level of about 30% per year according to their founding purpose. Nonetheless, the significant reduction in interest rate spreads compared to commercial banks at the beginning of last year is attributed to aggressive sales strategies that lowered rates on mortgage loans and jeonse loans. In particular, the launch of refinancing services for mortgage loans and jeonse loans and a focus on competing to lower loan interest rates in accordance with the authorities' wishes had a substantial impact.
However, shortly afterwards, the shift in the financial authorities' household loan management policy caused disruptions in such sales. Internet banks, which led the refinancing market at the beginning of the year, were also identified as 'the main culprit' behind the increase in household loans. In October of last year, the Financial Services Commission requested second-tier financial institutions, local banks, and internet banks to manage the 'balloon effect' of household loans.
At that time, Financial Services Commission Secretary-General Kwon Dae-young emphasized that internet banks should focus more on their core roles to ensure that there are no disruptions in providing diverse funding needs or funding for low- and mid-credit borrowers, rather than concentrating on easy sales primarily focused on mortgage loans. Following September, internet-only banks began to actively raise loan thresholds by shortening the maximum loan period for mortgage loans and increasing related interest rates.
Recently, internet banks have once again entered the competition to expand loans. Kakao Bank and K Bank have decided to increase the limit on mortgage loans for living stability funds from the existing 100 million won to 1 billion won.
However, despite this competition to expand loans, it seems unlikely that they will regain the reputation of being 'the top choice for mortgage loan rates.' Although the lowest mortgage loan interest rates at major internet banks like K Bank and Kakao Bank have decreased to 3.75% and 3.73%, respectively, as of the 9th, the lower end of the fixed (5-year) mortgage loan interest rates at the four major banks is maintained at a similar level of 3.46%. This is due to ongoing pressure on household debt management in the financial sector and a desire to avoid being identified again as a cause of increases in household loans amid the current loan relaxation atmosphere.
An official from an internet bank noted, "The interest rate competitiveness of internet banks is primarily achieved by lowering the interest rates on mortgage loans, which are considered safe products. However, in reality, since other banks do not lower their mortgage loan interest rates, if an internet bank lowers rates to expand loans, a phenomenon of 'crowding' may occur.