Bank Deposit and Savings Interest Rates Raised Across the Board... Loan Rates to Rise Soon

Top 5 Major Banks Raise Deposit and Savings Interest Rates by Up to 0.4% Points
Loan Interest Rate Increase Inevitable Soon

[Image source=Yonhap News]

[Asia Economy Reporter Park Sun-mi] The deposit and savings interest rates at the five major commercial banks have risen by up to 0.4 percentage points. As deposit and savings rates increase, the banks' funding costs also rise, making further increases in loan interest rates inevitable in the near future.

According to the banking sector on the 22nd, all five major banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?have reflected the Bank of Korea's 0.25 percentage point base rate hike by raising deposit and savings product interest rates by up to 0.4 percentage points. The earliest applied the increase from the 17th, and the latest from the 20th.

KB Kookmin Bank raised interest rates by up to 0.40 percentage points on 17 types of fixed and marketable deposits, including the Kookmin Super Time Deposit, and 20 types of installment savings such as the KB Dugun Dugun Travel Savings.

For KB Kookmin Bank's non-face-to-face exclusive product, KB Banryeo Happiness Savings, the highest interest rate for a 3-year term was changed to an annual 3.35%, and the KB Double Moa Deposit was adjusted to an annual maximum of 2.05% for a 1-year term. Notably, KB Kookmin Bank raised the interest rates of its representative universal products that offer various preferential rates based on transaction performance: KB Kookmin ONE Savings (fixed installment) by 0.4 percentage points and KB My Fit Savings, targeted at young adults starting their careers, by 0.3 percentage points.

NH Nonghyup Bank also raised deposit and savings interest rates by up to 0.40 percentage points. The general time deposit rate increased by 0.25 percentage points from 0.95% to 1.20% for deposits of one year or longer. Time savings rates were also raised by 0.25 percentage points, changing the rates for products with maturities of one year or more from 1.20% to 1.45%. The largest increase was for the Jayuro Preferential Student Savings, which rose from 1.35% to 1.75% for deposits over one year. Mutual installment savings were also adjusted upward from 1.15% to 1.40%.

Hana Bank raised interest rates on a total of 22 deposit products, including deposits and savings, by up to 0.30 percentage points. The base interest rates of seven major deposit and savings products such as ‘Salary Hana Monthly Compound Savings,’ ‘Main Transaction Hana Monthly Compound Savings,’ ‘My Mind Savings,’ and ‘Hana Time Deposit’ were increased by 0.25 to 0.30 percentage points. Additionally, the Energy Challenge Savings saw its highest interest rate for a 1-year term rise from 4.10% to 4.35%, the Hana Travel Savings from 2.70% to 2.95%, and the Hana OneQ Savings from 2.60% to 2.85%, each increasing by 0.25 percentage points.

Shinhan Bank also raised interest rates on 36 types of fixed and installment savings by up to 0.40 percentage points. The representative product ‘Hello, Nice to Meet You Savings’ now offers a maximum annual interest rate of 4.4% for a 1-year term. The Shinhan Merchant Swing Savings, designed to help self-employed individuals accumulate funds, increased to a maximum annual rate of 3.0% for a 1-year term. Furthermore, the 1-year term Shinhan My Home Savings rate was raised by 0.4 percentage points to a maximum of 2.6%. The interest rate for the 5-year term Future Planning Crevasse Pension Deposit for senior customers was also increased by 0.3 percentage points to an annual 2.15%.

Woori Bank raised interest rates on 18 fixed deposits and 20 savings products by 0.1 to 0.3 percentage points. The ‘Super Time Deposit’ rate increased from a maximum annual 1.45% to 1.7%, the ‘WON Savings’ from 2.5% to 2.6%, and the ‘Eussek (ESG) Savings’ product from 2.05% to 2.35%.

When the base interest rate rises, deposit and savings rates increase first, followed by loan interest rates after a time lag to reflect the rise in funding costs, so loan interest rates are likely to increase further soon.

Currently, the mortgage loan interest rates at commercial banks have surpassed the mid-5% range as the Cost of Funds Index (COFIX), which influences variable mortgage loan rates, has risen rapidly. Credit loan interest rates are also approaching the 5% annual mark. Since the COFIX rate reflects the banks' funding costs through deposits, savings, and bond issuance, it rises alongside deposit and savings interest rates.

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