Monday, November 29

The government is not ‘blaming the banks’ for the surge in loan interest rates… Don’t worry about reducing the borrower’s interest burden

It is pointed out that the recent surge in loan interest rates is not due to the increase in the additional interest rate calculated by banks, but is ignoring the reality of the government’s analysis that the increase in financing costs is a big factor. The deposit interest rate, which banks should raise to reflect the increase in financing costs, has risen slowly.

First, criticism is raised that the financial authorities are distorting reality by citing period statistics that are favorable to banks. On the 21st, the Federation for Financial Justice analyzed statistical data of the Bank of Korea (the difference in interest rates on bank household loans) and the Association of Banks (additional interest rates on household credit loans). pointed out that This year too, the loan-to-deposit margin has steadily increased, recording 2.01% as of the end of September. Earlier, the Financial Services Commission said that the loan-to-deposit margin was not large based on interest rate fluctuations over the past four months, but if you look at the period further, the increase in the loan-to-deposit margin is clear.

The Federation for Financial Justice said, “The reason the difference in interest rates between deposits and loans is widening is because banks raised interest rates on deposits and then significantly increased interest rates on loans. ” explained. In fact, if you look at the spread rates for the first and second grade household credit loans of the four major commercial banks, KB Kookmin, Shinhan, Woori, and Hana, last month, all banks except Hana Bank raised their spread rates by at least 0.4 percentage points compared to the end of last year. In particular, Woori Bank’s additional interest rate stood at 2.10% last month, up 0.67%p from the end of the year and 0.81%p from a year ago (1.29%). An official from the banking industry also acknowledged, “Most banks have raised the additional interest rate too much, using the excuse of worsening profitability due to the government’s total household loan management.”

Financial authorities are of the view that they cannot intervene because the loan-to-deposit margin is a market-determined price. However, it is pointed out that it is not convincing because it is different from the attitude of the authorities, which checked the appropriateness of the method of calculating the loan interest rate in the early days of the current government, and it does not match the fairness of regulation with other businesses. “The financial authorities are actively intervening in the card industry by calculating costs to lower card company merchant fees,” said Deuk-eui Kim, president of the Federation for Financial Justice. CEO Kim said, “In the past, banks achieved record-breaking performance even when the loan-to-deposit margin was 1.5 percentage points. It is time to look into whether or not it is calculated.”

As the recent surge in loan interest rates is largely due to a supply shortage, some advise that it is time for the financial authorities to think about ways to alleviate the burden of repayment of interest on borrowers by moving away from managing the total amount of household loans. An official from the banking industry mentioned that discussions on building a loan-for-exchange platform practically stopped after the announcement of measures against household debt last month. It is difficult to achieve effectiveness.” As commercial banks are reducing the limit and raising interest rates to raise the household loan threshold, borrowers have no other options. Jeon Seong-in, a professor at Hongik University, said, “The complaints about excessive profit margins can only be raised by borrowers who can use the first financial sector. It is regrettable that there is not enough discussion on how to solve the financial difficulties,” he said.

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