Curbs on loans drive borrowers to higher-cost savings banks

Tighter lending restrictions at commercial banks are driving borrowers toward savings banks, where interest rates are significantly higher, according to industry officials. Annual interest rates on mid-interest loans for borrowers with low to medium credit scores range from 9.7 percent to 16.2 percent, roughly two to three times the average for comparable commercial bank loans.

In the first half of this year, savings banks issued over 491,000 such loans, up 14 percent from the second half of last year and the highest level on record. This shift comes as banks tighten access to household credit, traditionally the main source of financing for consumers.

Brief written by urgent.news from The Korea Times's own syndicated text. Machine-written — it may contain errors, so check the original before relying on it.