A person takes a photo of apartment buildings in downtown Seoul from a skyscraper on June 13, 2021. (Yonhap)
SEOUL, July 6 (Korea Bizwire) — South Koreans in their 20s and 30s are struggling with rising interest rates.
A majority of loans for jeonse (long-term deposits for rent), in particular, are provided at floating interest rates, which makes young South Koreans react to an increase in interest rates with concern or give up on borrowing completely.
“I’m renting a jeonse-based home so I don’t have to pay monthly rent. In reality, though, it feels like I’m struggling even more,” said Lee, a 32-year-old resident of Incheon.
“I look at the soaring interest rates, and think twice about getting myself a new hobby.”
With higher prices and interest rates continuing to take a toll on livelihood, several banks are under fire for profiting from the loan-deposit margin.
While some banks have announced plans to lower interest rates for jeonse loans, the response is far from welcoming.
“The interest rate went from 2.37 percent to 3.91 percent. Lowering rates by 0.1 to 0.3 percentage points doesn’t mean anything,” said Hong, a 29-year-old citizen who has borrowed 150 million won (US$114,800) in a jeonse loan.
“The public is struggling, while the banks continue to reap profits from loan-deposit margins,” said Woo Seok-jin, a professor of economics at Myongji University.
“The Financial Supervisory Service and the Financial Services Commission should double-check the overall calculation of loan-deposit interest rates and the possibility of interest rate rigging among banks.”
Lina Jang (linajang@koreabizwire.com)
