[Image edited by Song Ji-yoon]
The combined loans of peer-to-peer (P2P) lenders in South Korea reached almost 2.3 trillion won ($2.1 billion) last month amid burgeoning demand for the debt financing service that allows individuals to borrow or lend money online without going through an official financial institution.
According to Korea P2P Finance Association on Monday, the accumulated loans of its 65 members reached 2.296 trillion won as of end of March, up 213.6 billion won or 10.26 percent from a month ago. By sector, total loans on real estate project financing reached 768.5 billion won, real estate mortgage 611.5 billion won, and other mortgages 472.4 billion won, and credit loans 443.2 billion won. The members’ average loan interest rate was 14.32 percent.
Amid the growth of P2P lending service, overall delinquency rate reached 2.21 percent as of end of last month, up 0.31 percentage point from a month ago. Delinquency occurs when loan repayment is delayed by 30 to 90 days. The rate of default, which occurs when loans are 90 days past due, dropped 0.55 percentage point to 2.62 percent during the same period.
The rapid growth of P2P lending sector in Korea, meanwhile, is calling for the government to draw up more detailed legislation. Korea’s P2P loan market reached 1 trillion won in June, last year and accelerated to hit 2 trillion won by February.
According to Crowd Institute, a Seoul-based researcher of P2P lending, the accumulated loans of P2P lenders in Korea is projected to reach 4.5 trillion won by the end of this year. Market growth will be spurred by the government’s move in February that increased investment limit of certain loan products from 10 million won to 20 million won.
By Oh Chan-jong and Lee Eun-joo
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]