The Financial Services Commission said it will launch a "mid-rate loan for living stabilization" for mid- to low-credit borrowers in the bottom 50% of credit scores starting on the 29th. The annual interest rate ranges from 5% to 15%, and six savings banks — KB, OK, SBI, Shinhan, Yegaram, and Korea Investment Savings Bank — began sales the same day.
This product is a follow-up to the "measures to boost mid-rate lending" released at the fourth meeting of the "inclusive finance grand transition" held on Apr. 27. The Financial Services Commission (FSC) and the industry have prepared the product so that mid- to low-credit borrowers can receive practical funding support within their repayment capacity. It is a mid-rate unsecured loan supplied under the financial companies' own credit.
Eligible borrowers are mid- to low-credit individuals in the bottom 50% of credit scores at the time the loan is issued. As of Jun. 29, this corresponds to 889 points at NICE Holdings and 875 points at KCB, and the scores may vary depending on the loan date. Specific eligibility requirements may differ by provider, so applicants should check the terms of the relevant financial company when applying.
The limit is up to 10 million won per borrower across all financial institutions combined. The financial company grants the final limit as the lower of the remaining limit calculated through a Credit Information Services inquiry (10 million won minus the outstanding loan balance of the same product) and the company's own calculated limit.
For the first set of providers, the interest rate ranges from a minimum of 5.9% annually to a maximum of 15.27%, determined through each financial company's credit scoring system according to the borrower's creditworthiness. To ease mid- to low-credit borrowers' interest burden, the Financial Services Commission (FSC) set the cap at 15.27%, 1.24 percentage points lower than the previous mid-rate loan cap (16.51%).
In particular, this product comes with a covenant prohibiting home purchases. Borrowers must agree not to purchase a home for one year after taking out the loan or until the loan is fully repaid. The measure aims to prevent living stabilization funds from being misused for housing speculation. If the covenant is breached, the loan must be repaid immediately, and for the next three years, borrowers will be restricted from obtaining housing-related loans and from using this product.
Applications can be made via each financial company's mobile app, by phone, or by visiting a branch. Interest rates can also be compared and applications submitted on online loan comparison platforms such as Toss, Kakao Pay, KakaoBank, Naver Pay, Finda, and Bank Salad.
Kim Jin-hong, director general of the Financial Industry Bureau at the Financial Services Commission (FSC), said, "As institutional support such as incentives tied to the total volume regulation of household loans is in place, we ask financial companies to advance their internal credit scoring systems so that the benefits of real rate cuts can be passed on to borrowers."