Both Bank Loan and Deposit Interest Rates Rise... Mortgage Loan Rates Increase for the First Time in 8 Months

Bank of Korea Announces June Weighted Average Interest Rates of Financial Institutions

As market interest rates, including bank bonds, rose, the loan and deposit interest rates in the banking sector continued their upward trend last month.

According to the 'Weighted Average Interest Rates of Financial Institutions' statistics released by the Bank of Korea on the 28th, the average interest rate on savings deposits (weighted average based on new transactions) at deposit banks last month was 3.69% per annum, up 0.13 percentage points from the previous month.

The interest rate on pure savings deposits such as time deposits rose 0.15 percentage points to 3.65%, while market-type financial products such as financial bonds increased 0.12 percentage points to 3.83%.

The overall average loan interest rate (weighted average based on new transactions) at deposit banks also rose 0.05 percentage points to 5.17% per annum last month.

The corporate loan interest rate (5.32%) increased by 0.12 percentage points from the previous month, with small and medium-sized enterprises rising 0.14 percentage points and large corporations rising 0.08 percentage points.

On the other hand, household loans fell by 0.02 percentage points to 4.81%. Although mortgage loan rates rose by 0.05 percentage points, general unsecured loans (-0.10 percentage points) and guaranteed loans (-0.05 percentage points) declined.

In the case of mortgage loans, the increase in the 5-year bank bond, a benchmark interest rate, expanded, marking a reversal to an upward trend for the first time in eight months since October last year.

Mortgage loans increased by 0.04 percentage points for fixed rates (4.20%) and 0.02 percentage points for variable rates (4.41%). Jeonse deposit loans rose 0.05 percentage points to 4.14%.

Despite the rise in the benchmark bank bond interest rate, general unsecured loans declined due to the introduction of a refinancing loan platform at the end of May, which led to the launch of refinancing loan-exclusive products with lower interest rates, intensifying interest rate competition.

The 'loan-deposit interest rate spread,' which is the difference between the loan interest rate and the savings deposit interest rate based on new transactions at deposit banks, was recorded at 1.48 percentage points. This narrowed by 0.08 percentage points from the previous month (1.56 percentage points), showing a decline for four consecutive months. The loan-deposit interest rate spread based on outstanding balances remained at the previous month's level.

The proportion of fixed-rate household loans fell by 2.1 percentage points to 50.8% in one month, as demand for variable rates increased due to a slowdown in expectations of rising interest rates and a narrowing interest rate spread. The fixed-rate proportion of mortgage loans decreased by 3.9 percentage points to 73.1%.

Among non-bank financial institutions, only savings banks saw a 0.04 percentage point increase in deposit interest rates, while credit unions (-0.07 percentage points), mutual finance (-0.08 percentage points), and Saemaeul Geumgo (-0.14 percentage points) experienced declines.

Loan interest rates fell across the board at savings banks (-0.33 percentage points), credit unions (-0.07 percentage points), mutual finance (-0.16 percentage points), and Saemaeul Geumgo (-0.12 percentage points).

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