Household Loan Interest Rates Surpass 3% in August... Impact of Base Rate Hike Unavoidable

[Asia Economy Reporter Jang Sehee] Last month, the average interest rate on household loans surpassed the 3% mark.

According to the "August Financial Institution Weighted Average Interest Rate" statistics released by the Bank of Korea on the 30th, the interest rate on new household loans last month was 3.10%, up 0.12 percentage points from the previous month (2.98%). This is the highest since July 2019 (3.12%) and the first time in 1 year and 10 months that the overall average household loan interest rate exceeded 3%.

The interest rate on general unsecured loans rose 0.11 percentage points from 2.86% to 3.97%, marking the highest level since June 2019 (4.23%). The mortgage loan interest rate increased by 0.07 percentage points from 2.81% to 2.88%, and the guarantee loan interest rate also rose by 0.09 percentage points from 2.76% to 2.85%.

The corporate loan interest rate rose 0.09 percentage points to 2.78% compared to the previous month. By company size, the interest rate on large corporate loans increased 0.11 percentage points to 2.56%, while the interest rate on small and medium-sized enterprise loans rose 0.08 percentage points to 2.93%.

Meanwhile, the Bank of Korea projected that loan interest rates could rise further in September and October, as the base rate hike has not yet been fully reflected. Song Jae-chang, head of the Bank of Korea’s Financial Statistics Team, said, "The rise in benchmark interest rates in August was due to expectations of a base rate hike, and the impact of the base rate hike will begin from September," adding, "The full impact of the base rate hike should be observed in September and October."

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