Financial authorities said they will ease household-loan volume caps to expand access to credit for mid-tier borrowers, excluding up to 80% of private-sector mid-rate loans from the overall lending limits. They also plan to allow credit card companies to offer Saitdol loans, aiming to increase mid-rate lending and encourage funding at lower interest rates.
The Financial Services Commission announced the measures on 27 at a meeting titled the fourth Inclusive Finance Transformation Conference, held at the KB Hope Finance Center in Seoul's Dongjak district.
The supply target for mid-rate loans this year is 31.9 trillion won, up 1.1 trillion won from last year. The plan calls for 3.6 trillion won in Saitdol loans and at least 28.3 trillion won in private mid-rate loans.
Under the plan, when financial firms manage their overall lending volumes, private mid-rate loans will be excluded by sector by up to 80%. The FSC said the step is intended to prevent a sharp contraction in access to credit for mid-tier borrowers as lenders tighten volume controls to manage household debt.
The government will also narrow eligibility for Saitdol loans to borrowers in the bottom 20% to 50% of credit scores, from the previous bottom 50%, to help mid-tier borrowers obtain sufficient funding at lower rates.
Officials said the change addresses criticism that Saitdol loans, introduced as a stepping-stone for mid-tier borrowers, have in practice been supplied mainly to low-credit borrowers in the bottom 20% or below. With the overhaul, Seoul Guarantee Insurance premium rates are expected to fall by up to 5.2 percentage points, and the supply amount is projected to increase by up to 100 billion won.
The FSC said it will expand Saitdol loan providers beyond banks, mutual finance institutions and savings banks to include specialized credit finance firms such as credit card companies and capital firms. It said participation by those firms, which hold customer data and credit-assessment capabilities for mid-tier borrowers, is expected to provide Saitdol loans at 8% to 12% interest and ease a so-called interest-rate cliff. That would be well below the existing 15.5% rate.
Rules for private mid-rate loans will also be revised. When calculating the interest-rate criteria used to recognize mid-rate loans, the FSC will reflect actual loan costs such as funding costs and credit costs, lowering sector-specific benchmarks by up to 1.25 percentage points. Second-tier financial products will be split into mid-rate loan categories 1 and 2 depending on rate levels, and category 1 products will apply interest rates at least 3 percentage points lower than current levels.
Financial Services Commission Chairman Lee Eok-won said inclusive finance must also serve as a reliable backstop so mid-tier borrowers can maintain stable financial lives. He said the government will work in balance with the private sector to support both low-credit and mid-tier borrowers and build what he called genuine inclusive finance.
* This article has been translated by AI.
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