In February, the average interest rate on mortgage loans in the banking sector hit the highest level in about nine years. The interest rate on household loans also reached 4%, the highest level in more than seven years.
According to statistics on the ‘weighted average interest rate for financial institutions’ released by the Bank of Korea on the 31st, the interest rate on home mortgage loans based on the new handling amount of deposit banks in February was 3.88% per annum, a 0.03 percentage point increase in one month. This is the highest level in 8 years and 11 months since March 2013 (3.97%). However, compared to the 0.22 percentage point increase in the interest rate on home mortgage loans from December of last year to January this year, the extent of the increase was significantly reduced.
The general credit loan interest rate (5.33%) also rose by 0.05 percentage points from the previous month, recording the highest level in seven years and six months since August 2014 (5.38%). The overall household loan interest rate also rose slightly to 3.93%, the highest since July 2014 (3.93%). As interest rates on short- and long-term indicators such as COFIX and bank bonds, which are the standard for loan interest rates, rose all at once, it had an impact on household loan rates.
Song Jae-chang, head of the financial statistics team at the BOK’s Economic Statistics Bureau, said, “Although household loan interest rates have risen overall, there was little effect from the increase in the spread of the banks. It remains to be seen to what extent financial institutions’ easing of lending attitudes will progress.”
The overall loan interest rate of deposit banks, which reflects both household and corporate loan rates, was calculated to be 3.56% per annum. The corporate loan interest rate (3.44%) jumped 0.14 percentage points from January (3.30%). Team leader Song explained, “The corporate loan interest rate has risen as the index interest rate rises, the proportion of long-term bonds increased, and the handling of high-interest loans from non-premium companies overlapped.”
The savings bank’s deposit interest rate also rose by 0.05 percentage points in one month to 1.7% per annum, the highest level since December last year. The Bank of Korea analyzed that it was the effect of the rise in market interest rates and the launch of the Youth Hope Savings Savings Fund. As the loan interest rate rose higher than the deposit rate, the difference between banks’ deposit-to-deposit interest rates (loan interest rate – savings interest rate) rose 0.60 percentage points to 1.86%, the widest gap in nine months since May last year (1.89%). Based on the balance, not the new handling amount, it rose 0.03 percentage points to 2.27%.
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Source: 경제 by www.segye.com.
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