In August of this year, the mortgage loans from the three major internet banks amounted to 32.4 trillion KRW, marking an increase of 11 trillion KRW (47%) over the past year. In comparison, banks’ mortgage loans grew by 8.9% during the same period. Recent data indicates that amidst the surge in household loans, housing loans from internet banks have risen significantly. Critics argue that internet banks are focusing more on mortgage operations, which are easier to profit from through interest gains than on the medium and low-credit loans they were intended to provide, thereby contributing to the increase in household loans.
According to data received by Kim Hyun-jung, a member of the National Assembly’s Political Affairs Committee from the Financial Supervisory Service, as of August this year, the outstanding balance of mortgage loans (including jeonse loans) from the three internet banks – Kakao Bank, K Bank, and Toss Bank – stood at 34.4 trillion KRW. This represents a 47% growth (approximately 11 trillion KRW) from the same month last year (23.4 trillion KRW).
As of May last year, the outstanding balance of internet bank mortgages was below 20 trillion KRW (19.3 trillion KRW) but had risen to 26.6 trillion KRW by the end of the same year. By February this year, it had surpassed 30 trillion KRW, reaching 30.5 trillion KRW. This growth rate is much steeper compared to the 10.4% increase in the mortgage balance of the five major commercial banks (KB, Shinhan, Hana, Woori, NH Agricultural Bank), which went from 515 trillion KRW to 568.7 trillion KRW during the same period.
Overall, the mortgage loans from all banks grew by 8.9% from 655.4 trillion KRW to 714.1 trillion KRW over the same period. By individual banks, K Bank’s mortgage balance surged by 87.8%, from 4.1 trillion KRW in August last year to 7.7 trillion KRW this August. Kakao Bank’s balance increased by 29%, from 19.3 trillion KRW to 24.9 trillion KRW. Toss Bank, which does not handle mortgages, launched such loans last September, reaching a balance of 1.8 trillion KRW by August this year.
The success of internet banks in offering low interest rates and convenience in the recently started mortgage and jeonse loan switch service (refinancing service) is seen as a factor in this trend. However, criticism arises that by expanding mortgages which have less risk of defaults and provide easy interest income, internet banks demonstrate inappropriate business conduct, deviating from their original purpose of offering medium and low-credit loans.
Representative Kim argued, “The rapid increase in housing loans by internet banks is inconsistent with the aim of establishing internet-only banks to pursue inclusive finance.” He warned that “the rapid growth in loans could deteriorate the quality of household debt and cause instability in financial markets,” emphasizing the need for thorough management and supervision by financial authorities.