Interest rates rising terribly… Household loan interest rate 4.76% per annum [뉴스 투데이]

As long-term and short-term index interest rates rose due to the base rate hike, the overall household loan interest rate in the banking sector in August jumped to the highest level in 9 years and 7 months. The interest rate on new borrowers’ credit loans has exceeded 6% per annum, and 1 in 5 borrowers get a loan at an interest rate of over 5%, increasing the interest burden on borrowers.

According to statistics on ‘Financial Institutions’ Weighted Average Interest Rate’ released by the Bank of Korea on the 30th, the interest rate on household loans based on the new amount handled by deposit banks in August was 4.76%, a 0.23 percentage point increase in one month. This is the highest since January 2013 (4.84%).

A loan window at a bank in downtown Seoul. yunhap news

Among household loans, the interest rate on mortgage loans rose 0.19 percentage points from the previous month to 4.35 percent, the highest since August 2012 (4.41 percent) in 10 years. The credit loan interest rate, which fell slightly in July as banks applied preferential rates to Citibank’s transfer (transfer) loans, rose 0.33 percentage points in one month to 6.24 percent.

As the household loan interest rate rose, the proportion of high interest rates, where the interest rate based on new transactions in August exceeded 5%, also accounted for 21% of the total. The proportion of loans with high interest rates of 5% or higher was only 1~2% until last year, but it is showing a sharp rise this year.

The proportion of fixed interest rates among new household loans in August also increased by 7.0 percentage points to 24.5% from 17.5% in July. Park Chang-hyeon, head of the financial statistics team at the BOK’s Economic Statistics Bureau, said, “This is because the interest rate for the hybrid (fixed) mortgage loan type in August was lower than the variable rate. On the other hand, in terms of balance, floating rate loans still accounted for the overwhelming majority at 78.5%. This is the highest level in 8 years and 5 months since March 2014 (78.6%).

The corporate loan interest rate also rose by 0.34 percentage points to 4.46 percent from 4.12 percent in July. This is the highest level in eight years and one month since July 2014 (4.54%). The average interest rate (based on new transaction amount) of all deposit banks, which reflects both corporate and household loan rates, was 4.52%, 0.31 percentage points higher than in July (4.21%).

The average interest rate for savings-type receipts (deposits) such as savings and savings accounts stood at 2.98% per annum, up only 0.05 percentage points from the previous month. This is the highest level in 9 years and 7 months since January 2013 (3.00%), but compared to July (0.52% points), the increase was significantly reduced.

As the loan interest rate rose much faster than the deposit rate, the loan-to-deposit interest rate difference (average loan interest rate – savings interest rate) widened. The difference in the loan-to-deposit interest rate based on the new transaction amount of banks in August was 1.54 percentage points, 0.26 percentage points higher than in July (1.28 percentage points).

According to the report of the BOK’s monthly survey statistics monthly report ‘Analysis and Implications of Interest Rate Sensitivity of Household Loans’, if the loan interest rate rises by 1 percentage point from the 3% level, the increase in household loans per borrower decreases by about 1.56 million won. done. The higher the income or the higher the debt ratio, the more sensitive the interest rate was, and it was found that the sensitivity to interest rates was higher than before after the novel coronavirus infection (COVID-19).

Reporter Yoo Ji-hye [email protected]

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