NH Nonghyup Bank to cut ‘jeonse’ loan rate by up to 1.1 percentage points

NH Nonghyup Bank building [Courtesy of NH Nonghyup Bank]

NH Nonghyup Bank will lower the interest rate on loans for long-term rental deposits by as much as 1.10 percentage points from 2023, becoming the second major commercial lender in Korea to respond to the government‘s efforts to ease financial burden on households.

NH Nonghyup Bank said Thursday that it will reduce the fixed interest rate on its loan products for large lump-sum deposit for a housing or building lease, or jeonse, by up to 1.10 percentage points from Jan. 2, 2023. Applicable loans are those guaranteed by Seoul Guarantee Insurance Co., Korea Housing-Finance Corp. and Korea Housing and Urban Guarantee Co.

Accordingly, the rates will drop to as low as below 5 percent.

NH Nonghyup Bank is the second to reduce jeonse loan rate among the country’s five major commercial lenders. Earlier on Dec. 9, Woori Bank announced a rate cut.

Their move comes as financial authorities began monitoring loan rates amid efforts to ease household debt burden.

The Korean government has been releasing a series of loan relief programs, such as providing a special fixed loan of below 5 percent on mortgages for a year. However, jeonse loans have been left out from the latest relief measures.