Financial authorities may expand the budget and range of the long-term fixed-rate loan transfer system, reflecting soaring public demand for lower interest burdens.

“The FSC is communicating with nonmonetary institutions on whether or not to apply the low-rate loan switch system to savings banks and community credit cooperative borrowers,” Kwon Dae-young, financial policy official at the FSC, told reporters Wednesday.

“We also decided to abolish the monthly limit and administer the total yearly budget flexibly throughout the year.”

The government-backed loan transfer system, which kicked off Tuesday to roll back the nation’s household debts, allows those who have taken short-term, floating-rate mortgage loans to transfer into longer term loans with a fixed interest rate ranging from 2.53-2.75 percent.

The yearly cap was set at 20 trillion won ($18 billion) but the amount approved at 11 a.m. Wednesday already exceeded 5.4 trillion won, eclipsing the monthly ceiling of 5 trillion won and signaling an earlier-than-expected closure.

“We are considering a budget increase once the 20 trillion won cap is exhausted, but the action is not likely to take place within the first half of the year, considering the circumstances,” said the FSC official.

But as borrowers are looking to fix their rates before the interest rate rallies in the latter half of the year, observers predict that competition for the low-rate loan transfer will continue for a while.

By Bae Hyun-jung (tellme@heraldcorp.com)