Loan refinancing app expected to pull down rates

Commercial banks and other financial firms are anticipated to lower lending rates to attract new customers following the launch, Wednesday, of an online, onestop platform allowing borrowers to switch to other lenders.

The Financial Services Commission (FSC) announced, Tuesday, that the platform comes as borrowers struggle to make repayments following steep interest rate hikes, while banks are reaping massive interest incomes.

Clients will be able to compare interest rates offered by different lenders and other competing companies on smartphone apps. The apps were developed by six firms — Naver Pay, Kakao Pay, Toss, Finda, Bank Salad, KB Kookmin Card and Welcome Savings Bank.

Borrowers will be able to switch to a new lender using the app to pay back principal and interest if their aggregate loans do not exceed 1 billion won ($755,000) and do not require collateral.

More than 50 firms, including top-tier and second-tier banks, credit card companies and auto financing companies, will join the program.

“We expect the policy to ease the financial burden on borrowers amid economic unrest,” the FSC said.

The financial regulator expressed hope that the app will help borrowers save time by eliminating the need to visit different lenders to inquire about lending rates.

Officials at several banks said offering the lowest possible rates will be necessary to retain customers and also attract new ones.

“However, the lending rates are already at a low level in line with the government’s repeated demands to help improve people’s livelihoods,” an official at one bank said.