Mortgage rates surpass 3% in September after rate hike... highest in 2 years and 6 months

Bank of Korea Announces 'Weighted Average Interest Rates of Financial Institutions in September 2021'
General Credit Loan Rates Also Surpass 4%... Highest Since April Last Year

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Due to the base interest rate hike and loan regulations by financial authorities, the mortgage loan interest rate surpassed 3% last month.

On the 29th, the Bank of Korea announced through the 'Weighted Average Interest Rates of Financial Institutions in September 2021' report that the average mortgage loan interest rate of deposit banks based on new loan amounts last month rose by 0.13 percentage points from the previous month to 3.18%. This is the highest level since March 2019 (3.04%) and the largest increase since November 2016 (0.15 percentage points).

The average interest rate for general unsecured loans recorded 4.15%, up 0.18 percentage points from the previous month. This is also the highest since June 2019 (4.23%). It rose further after recording 3.97% the previous month.

This is because benchmark interest rates such as COFIX and bank bonds rose, and banks generally increased rates by reducing preferential interest rates to curb household loans.

Song Jae-chang, head of the Financial Statistics Team at the Bank of Korea's Economic Statistics Bureau, analyzed, "The base interest rate hike appears to have been reflected in the benchmark interest rates in September," adding, "In the case of mortgage loans, the 5-year bank bond rate rose by 0.14 percentage points from 1.89% in August to 2.03% in September." He further stated, "Both fixed and variable interest rates increased, and efforts to reduce preferential interest rates also seem to have been partially reflected."

Along with loan interest rates, deposit interest rates also increased. The average interest rate on savings deposits at deposit banks rose by 0.14 percentage points from 1.03% per annum to 1.17%.

Loan interest rates in the non-bank sector increased mainly in credit cooperatives and mutual finance. The average interest rate for general loans at mutual finance institutions rose by 0.08 percentage points from the previous month to 3.40%. The average interest rate at credit cooperatives increased by 0.02 percentage points from the previous month to 3.87%.

Meanwhile, the average corporate loan interest rate at banks based on new loan amounts last month also rose by 0.10 percentage points from the previous month to 2.88%. The interest rate for large corporations increased by 0.08 percentage points to 2.64%, and for small and medium-sized enterprises, it rose by 0.12 percentage points to 3.05%.

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