Following Shinhan and NongHyup Banks, Woori Bank Also Considers Interest Rate Hike

A loan counter at a bank in downtown Seoul (Photo by Yonhap News)

[Asia Economy Reporter Kwangho Lee] Following Shinhan Bank and NH Nonghyup Bank, Woori Bank is also reportedly considering raising interest rates on mortgage loans and jeonse deposit loans.

According to the banking sector on the 14th, Woori Bank is internally reviewing an increase in mortgage loan interest rates.

Previously, on the 5th, Shinhan Bank raised both mortgage and jeonse deposit loan interest rates by 0.2 percentage points each, and on the 8th, Nonghyup Bank lowered the preferential interest rate on household mortgage loans by 0.3 percentage points per annum.

Nonghyup Bank completely eliminated the 0.2 percentage point preferential interest rate previously offered to new borrowers and reduced the preferential rate by 0.1 percentage points when selecting short-term variable rate mortgage loans. Instead, considering funding resources, the preferential interest rate on jeonse deposit loans was raised by up to 0.1 percentage points.

Credit loan interest rates are based on short-term financial bond rates such as 6-month and 1-year bank bonds. The 1-year bank bond (AAA, unsecured), which is most commonly used as the benchmark rate for credit loans, rose from 0.761% at the end of July last year to 0.885% as of the 11th, an increase of 0.124 percentage points in about six months.

Variable mortgage loan interest rates mainly follow COFIX, which reflects interest rate changes on deposits, savings, and bank bonds of eight domestic commercial banks. The COFIX applied by banks in February (based on January) was 0.86% for new loans, 0.05 percentage points higher than 0.81% in July last year.

Many forecasts expect household loan interest rates to continue rising. This is because the market interest rate is likely to keep increasing for the time being due to economic recovery and inflation rebound.

The rise in loan interest rates burdens not only new borrowers but also existing borrowers who have already taken out loans. This is because existing credit loan borrowers often have interest rates adjusted every 3 to 6 months.

This content was produced with the assistance of AI translation services.