Interest Rate Hike... Bank Mortgage and Credit Loan Rates Reach Highest in 7 Years

Announcement of Weighted Average Interest Rate Statistics for Financial Institutions

[Asia Economy Reporter Jang Sehee] The average interest rate on mortgage loans in the banking sector reached the mid-3% range in November, while the average interest rate on unsecured loans exceeded 5%. This marks the highest level in seven years.

This is due to the rise in benchmark interest rates (such as COFIX and bank bonds) and the overall increase in rates by banks.

According to the "Weighted Average Interest Rates of Financial Institutions" statistics released by the Bank of Korea on the 30th, the weighted average interest rate on mortgage loans at deposit banks (based on new loans) in November was 3.51% per annum, up 0.25 percentage points from the previous month. This is the highest level in 7 years and 4 months since July 2014 (3.54%).

The interest rate on unsecured loans also jumped 0.54 percentage points from 4.62% to 5.16% per annum, marking the highest record since September 2014 (5.29%). The increase of 0.54 percentage points is the largest in 9 years and 2 months since September 2012 (0.66 percentage points).

The overall household loan interest rate rose 0.15 percentage points from 3.46% in October to 3.61% per annum. The 3.61% household loan interest rate is the highest since December 2018 (3.61%). The corporate loan interest rate (3.12% per annum) also increased by 0.18 percentage points from 2.94% in October, returning to the 3% range for the first time in 1 year and 9 months since February 2020 (3.19%).

The average interest rate on savings deposits at deposit banks also rose 0.28 percentage points from 1.29% to 1.57% per annum.

Meanwhile, the spread between the loan interest rate and the savings deposit interest rate at deposit banks, known as the net interest margin, was 1.66 percentage points, down 0.12 percentage points from 1.78% in October.

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