As the Base Interest Rate Rises, Insurance Companies' Loan Interest Rates Also Increase

[Asia Economy Reporter Changhwan Lee] As the Bank of Korea continues to raise its benchmark interest rate, insurance companies, following banks, are also increasing mortgage loan (Judaemdae) interest rates.

With the Bank of Korea preparing for additional rate hikes, mortgage loan interest rates are expected to continue rising.

According to the insurance industry on the 13th, the operating interest rates for variable-rate installment repayment apartment mortgage loans from major domestic insurers such as Samsung Life, Hanwha Life, Kyobo Life, Shinhan Life, Samsung Fire & Marine, and Hyundai Marine & Fire last month ranged from 3.71% to 5.55%.

Compared to the previous month's 3.33% to 5.20%, both the lower and upper bounds increased. In the case of Samsung Life, the rates were adjusted from 3.66% to 4.36% in January to 3.82% to 5.32% in February. The average interest rate also reached 4%.

Hanwha Life's rates rose from 3.90% to 4.90% to 4.36% to 5.16%, and Kyobo Life's from 4.61% to 5.20% to 4.96% to 5.55%. During the same period, Samsung Fire & Marine's rates increased from 3.66% to 4.63% to 3.71% to 4.58%.

As the Bank of Korea raised its benchmark rate, mortgage loan interest rates across the financial sector have generally been on the rise. According to the Bank of Korea, the household loan interest rate for deposit banks, combining mortgage and credit loans, was 3.91% per annum (based on new loan amounts) in January, up 0.25 percentage points from the previous month. This marks the eighth consecutive month of increase and is the highest level since July 2014 (3.93%).

Individual banks' mortgage loan rates also jumped. The variable-rate mortgage loan interest rates of the five major banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?were between 3.57% and 5.07% in January, with the upper bound rising to 5.17% in early March, up 0.1 percentage points.

Mortgage loan interest rates in the financial sector are likely to continue rising. With the U.S. Federal Reserve (Fed) signaling rate hikes and the Bank of Korea already raising its benchmark rate, further increases are expected. The financial sector anticipates that the Bank of Korea will raise its benchmark rate twice this year.

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