Loan interest rates, insurance is cheaper than banks

An 'interest rate inversion' phenomenon has occurred, where insurance companies' mortgage rates are lower than those of commercial banks. Although prospective homebuyers are flocking to insurance companies in search of low interest rates, there are also concerns that it is necessary to carefully check the credit score, delinquency rate, and interest rate forecast before lending.

According to 'Financial Products at a Glance' by the Financial Supervisory Service on the 20th, the interest rate on a 30-year fixed-rate mortgage loan was the lowest at 3.33% to 4.91% per annum. Samsung Fire & Marine Insurance was followed by 3.52~4.82%. Fubon Hyundai Life Insurance was followed by 3.95-5.41%, Kyobo Life 4.01-5.20%, and Hanwha Life 4.10-5.00%.

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Among commercial banks, Shinhan Bank handles mortgage loans at 3.89~4.69%, while Kookmin Bank accounts for 3.89~5.09%. Hana Bank's 3.98-5.28%, Woori Bank's 4.22-5.62%, etc., were offered at higher interest rates than insurance companies.

As insurance companies' interest rate competitiveness increases, more and more customers are turning to insurance companies for loans.

An insurance industry official said, "Insurers provide professional loan consultations such as mortgage loans at credit branches." At the end of last year, Samsung Fire & Marine Insurance and DB Insurance could not meet the household loan demand and temporarily stopped lending.

The tightening of regulations on the total debt-to-income ratio (DSR) from this year is also one of the factors contributing to the increase in demand for mortgage loans from insurance companies. DSR is an indicator of the ratio of principal and interest required to repay debts among borrowers' income. The DSR is limited to 40% for banks, but 50% for insurance companies. This means you can get more loans from your insurance company.

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However, before taking out a loan from an insurance company based only on interest rates, you must consider credit score and prepayment fees.

First of all, unlike a bank, which is the primary financial sector, an insurance company is a secondary financial sector. Although the extent of the decline in the credit score has been moderate, loans from the second financial sector have a negative effect on the credit score.

The prepayment fee is also higher than that of banks. Bank prepayment fees range from 1.2% to 1.4%, while some insurance companies have it as high as 2.0%. Overdue interest is also set high. The highest interest rate for banks is 12 to 15%, while insurance companies reach 17 to 19%. This is close to the legal maximum interest rate of 20%.

Floating rate borrowers should also be aware that interest rate inversions may be temporary. Unlike banks, which finance loans with deposits, insurance companies that rely on the interest rate of government bonds to calculate their interest rates will inevitably have to raise the interest rates on loans as the interest rates on government bonds rise. The interest rate on the 3-year government bond, which is the standard for mortgage loan interest rates for insurance companies, rose 0.497 percentage points from 1.798% on December 31 last year to 2.295% on the 17th.

Fixed interest rates are also not safe. Fixed interest rates are usually subject to change every 6 months after 5 years.

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