January Mortgage Loan Interest Rate at 3.85%... Highest in 8 Years and 9 Months

View of downtown apartment complexes from Namsan, Seoul [Image source=Yonhap News]

In January, the average interest rate on mortgage loans rose to the highest level in 8 years and 9 months.

According to the "Weighted Average Interest Rate of Financial Institutions" statistics released by the Bank of Korea on the 3rd, the household loan interest rate based on new loan amounts at deposit banks in January was 3.91% per annum, up 0.25 percentage points from the previous month, continuing the upward trend. This is the highest level since July 2014 (3.93%).

The interest rate on mortgage loans among household loans rose 0.22 percentage points in one month to 3.85% per annum. This is the highest figure in 8 years and 9 months since April 2013 (3.86%). As mortgage loan interest rates are rising significantly, it is expected that the interest burden on people who bought homes with loans will increase.

The Bank of Korea explained, "Due to the rise in short- and long-term benchmark interest rates, mortgage (0.22 percentage points), guarantee (0.19 percentage points), and group (0.26 percentage points) loan interest rates increased, and general credit loan interest rates rose by 0.16 percentage points due to the expansion of mid-interest rate loans, resulting in an overall household loan interest rate increase of 0.25 percentage points compared to the previous month."

As the special sale effect for year-end liquidity management disappeared and the proportion of long-term products decreased, the overall interest rate on savings deposits fell by 0.05 percentage points to 1.65% compared to the previous month. Pure savings deposits fell by 0.3 percentage points, and market-type financial products fell by 0.14 percentage points, respectively.

Corporate loan interest rates continued to rise. In January, the corporate loan interest rate was 3.30% per annum, up 0.16 percentage points from the previous month. This is the highest since January 2020 (3.32%). The interest rate on large corporate loans rose 0.17 percentage points (from 2.86% to 3.03%), and the interest rate on small and medium-sized enterprise loans rose 0.15 percentage points (from 3.37% to 3.52%).

The average interest rate on all loans at deposit banks, reflecting both corporate and household loan interest rates, was 3.45%, 0.2 percentage points higher than in December last year (3.25%).

The statistics based on new loan amounts mean the weighted average interest rate applied to deposits and loans newly handled by banks during the month, weighted by the amount of new transactions. Since it reflects recent interest rate trends well, it can be usefully utilized by financial consumers who want to save at banks or take out general loans.

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