Starting in the second half of 2021, the legal maximum interest rate imposed by lenders in South Korea will be lowered from an annual 24 percent to 20 percent.

The Financial Services Commission(FSC) said on Monday that the decision was reached between the government and the ruling Democratic Party(DP) in line with the low-interest trend and to ease the burden on the public amid the prolonged COVID-19 pandemic.

Financial authorities previously lowered the legal maximum rate from 27-point-nine to 24 percent in February 2018.

The state financial regulator said some two-point-08 million out of two-point-39 million people who borrowed money with interest surpassing 20 percent as of March this year will see their interest payments decline, with the decreased interest burden projected to hit 483 billion won in total each year.

As lenders are expected to reject loan extensions for the remaining 316-thousand borrowers over the next three to four years, forcing some 39-thousand to resort to illegal private loans, the FSC plans to expand its loan program for low-credit borrowers.