Korea's five major banks: household early repayments fall 12.7% by value in Jan-Aug
In short
Household borrowers at South Korea's five major banks repaid loans early less often this year, with the January-August early repayment amount falling 12.7% to 19.56 trillion won and August cases down 33.8% year on year to 58,570, Yonhap reported. The banks' early repayment fee income for January-August fell 39.5% to 55.8 billion won, after the government overhauled the fee system and banks cut or waived charges. Chosun Ilbo attributed the decline to tighter loan limits and higher rates that make re-borrowing difficult; Yonhap pointed to steady demand for funds and borrowers keeping credit loans.
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Household borrowers at South Korea's five major banks — KB Kookmin, Shinhan, Hana, Woori and NH Nonghyup — repaid loans early less often this year. Early repayment cases in August totalled 58,570, down 33.8% from 88,534 a year earlier, and the amount fell 29.2% to 1.9432 trillion won, Yonhap reported, citing the banking industry. [ 1 ]
Credit loans accounted for much of the decline: 20,650 early repayments worth 160.8 billion won in August, down 49.6% in cases and 55.6% in value from a year earlier. Mortgage early repayments fell 17.8% in cases to 24,522 and 29.7% in value to 1.197 trillion won. Cumulatively for January through August, early repayments numbered 660,062, down 8.1% from 718,268 a year earlier, and were worth 19.5605 trillion won, down 12.7% from 22.4077 trillion won. Monthly cases declined from 97,224 in January to 72,373 in July and 58,570 in August, while monthly amounts fell from 3.0245 trillion won in January to below 2 trillion won in August. [ 1 ]
Bank fee income from early repayments fell in step: 5.34 billion won in August, down 48.5% from 10.38 billion won a year earlier, and 55.8 billion won cumulatively for January to August, down 39.5% from 92.3 billion won. Yonhap reported the government overhauled the early repayment fee system in January last year so that fees on new loans reflect only banks' actual costs, lowering the five banks' average mortgage fee rate to 0.65% from 1.4% for fixed-rate loans and from 1.2% for variable-rate loans. [ 1 ]
Banks have also cut or waived the charges to encourage repayment, according to Yonhap: KB Kookmin has temporarily waived early repayment fees on all household credit loan products since July 20, NH Nonghyup fully waived penalties on household mortgages taken out in 2024 between May 20 and June 30, and Hana Bank operates a waiver programme for vulnerable borrowers. [ 1 ]
The two outlets gave different explanations for why borrowers repaid less. Yonhap said continued demand for funds amid a strong stock market and more housing transactions, and borrowers preferring to keep credit loans rather than clear them, were factors. Chosun Ilbo attributed the decline to reduced loan limits and higher interest rates that make it difficult to borrow again once a loan is repaid, along with more borrowers judging it better to keep existing loans. [ 1 , 2 ]
In the previous year, the five banks recorded 1.048 million early repayments, up 11.7% from 938,000 the year before, while the value fell 5.1% to 32.1 trillion won from 33.8 trillion won — a result attributed to more early repayment of relatively small loans. Fee income that year fell 16.5% to 125.6 billion won from 150.4 billion won, Yonhap reported. [ 1 ]
Why it matters
The data shows that cutting or waiving early repayment fees has not produced the household debt reduction banks and regulators sought, and that fee income tied to those repayments has fallen sharply. For borrowers, the two accounts suggest that repaying a loan early is losing its appeal, either because funds are in demand elsewhere or because re-borrowing has become harder. The documents give no indication of how regulators or banks will respond.
Key facts
- Early repayment of household loans at the five major banks totalled 58,570 cases in August, down 33.8% from 88,534 a year earlier, with the amount down 29.2% to 1.9432 trillion won. [ 1 ]
- January-August early repayments numbered 660,062 cases, down 8.1%, and were worth 19.5605 trillion won, down 12.7% from 22.4077 trillion won a year earlier. [ 1 ]
- August credit loan early repayments fell 49.6% in cases to 20,650 and 55.6% in value to 160.8 billion won; mortgage early repayments fell 17.8% in cases to 24,522 and 29.7% in value to 1.197 trillion won. [ 1 ]
- The five banks' early repayment fee income was 5.34 billion won in August, down 48.5% from a year earlier, and 55.8 billion won for January-August, down 39.5%. [ 1 ]
- Yonhap reported the government overhauled the early repayment fee system in January last year so fees on new loans reflect only banks' actual costs, cutting the average mortgage rate to 0.65% from 1.4% for fixed-rate loans and from 1.2% for variable-rate loans. [ 1 ]
- KB Kookmin has temporarily waived early repayment fees on all household credit loan products since July 20, NH Nonghyup fully waived penalties on 2024 household mortgages between May 20 and June 30, and Hana Bank runs a waiver programme for vulnerable borrowers. [ 1 ]
- Monthly early repayment cases fell from 97,224 in January to 72,373 in July and 58,570 in August, while monthly amounts dropped from 3.0245 trillion won in January to below 2 trillion won in August. [ 1 ]
- Chosun Ilbo attributed the decline to reduced loan limits and higher interest rates that make re-borrowing difficult, and to more borrowers judging it better to keep existing loans. [ 2 ]
Confirmed by several sources
- Early repayment of household loans at South Korea's five major banks declined in August and over January-August compared with a year earlier. [ 1 , 2 ]
- The value of January-August early repayments fell by about 13% year on year. [ 1 , 2 ]
- Banks lowered or temporarily waived early repayment fees, yet the number and value of early repayments still fell. [ 1 , 2 ]
Still unclear
- Why borrowers repaid less The two documents give different reasons: Yonhap cites continued demand for funds amid a strong stock market and more housing transactions, and borrowers holding on to credit loans, while Chosun Ilbo cites reduced loan limits and higher rates that make re-borrowing hard. Neither explanation is attributed to a named source beyond the banking industry.
- Whether the decline in early repayments continues after August No data beyond August is given in the documents.