[Edaily Reporter Jeong Min-ju ] It has been revealed that domestic banks reduced loan interest payments by nearly 73.5 billion won in the first half of this year through the right to request a rate reduction. In particular, analysts note that reducing interest rates on household loans has eased the interest burden on individual borrowers. As the economy has recently entered a period of rising interest rates, borrowers’ attention is focused on how much they can lower their loan interest rates. A banking industry official explained, “During a period of rising interest rates, utilizing the right to request a rate reduction is a way to reduce the interest burden.”

According to the Korea Federation of Banks on the 31st, 19 domestic banks reduced interest payments by 73.43 billion won through the right to request an interest rate reduction in the first half of this year (January–June). This represents a 0.8% (550 million won) increase compared to the second half of last year (72.88 billion won). Interest on household loans rose by 19.4% (6.54 billion won) to 40.29 billion won, while interest on corporate loans decreased by 15.3% (5.99 billion won) to 33.14 billion won.

The five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) increased the amount of interest reductions by 8.6% (2.257 billion won), from 25.986 billion won in the second half of last year to 28.243 billion won in the first half of this year, through the right to request interest rate reductions. During the same period, interest relief on household loans increased by 25% (4.714 billion won), from 18.825 billion won to 23.539 billion won, while interest relief on corporate loans decreased by 34% (2.457 billion won), from 7.161 billion won to 4.704 billion won. An official from the Korea Federation of Banks analyzed, “For corporate loans, as market competition intensified, the reduction in interest rates achieved through refinancing was limited.”

Analysts attribute the recent increase in the scale of interest reductions achieved through the right to demand a rate reduction to the rise in the number of applications. Since financial authorities launched a MyData service at the end of last year that uses AI to submit applications for the right to request a rate reduction on behalf of customers, the number of applications has surged by 77% (1,166,000 cases) in just six months. The number of accepted requests jumped by 22.5% (94,000 cases), from 418,000 to 512,000.

However, despite the rise in applications, the acceptance rate for the right to request an interest rate reduction fell by 8.5 percentage points over the six-month period, from 27.6% to 19.1%.

Among the five major banks, Hana Bank offered the largest interest rate reduction in the first half of this year. Hana Bank lowered its interest rate by 0.34 percentage points, followed by KB Kookmin Bank at 0.32 percentage points, and Shinhan Bank, Woori Bank, and NH Nonghyup Bank, which reduced their rates by 0.14 to 0.19 percentage points.

For a borrower who took out a 600 million won mortgage (30-year term, equal principal and interest payments) at a 5% interest rate from one of the five major banks, applying the right to demand a rate reduction would have reduced their principal and interest repayment burden by up to 120,000 won. This amounts to savings of 1.44 million won per year.

With the Bank of Korea recently raising the benchmark interest rate twice in succession, there are expectations that applications for the right to request a rate reduction will increase. While refinancing can secure lower interest rates during periods of falling interest rates, the right to request a rate reduction is considered more effective during periods of rising interest rates. The upper limit for mortgage interest rates is approaching 8%.

An official from a commercial bank stated, “If you apply for a refinancing loan during a period of rising interest rates, you may end up with a higher interest rate than your current one,” adding, “It would be more advantageous to exercise the right to demand a rate reduction, which excludes the premium from your existing interest rate.”