July Bank Loan Interest Rates Turn Down to '5.11%'... Mortgage Loans Rise Again

Last month, both loan and deposit interest rates in the banking sector turned downward. However, mortgage loan interest rates continued to rise.

According to the 'Weighted Average Interest Rates of Financial Institutions' statistics released by the Bank of Korea on the 30th, the average interest rate on savings deposits (weighted average, based on new contracts) at deposit banks in July was 3.68% per annum, down 0.01 percentage points from the previous month.

The Bank of Korea explained this as "an effect of eased competition among banks for deposits."

The pure savings deposit interest rate fell by 0.02 percentage points to 3.63%. Although the interest rate on installment savings rose by 0.19 percentage points due to the launch of the Youth Leap Account, interest rates on time deposits and others declined.

The interest rate on market-type financial products was recorded at 3.80%, down 0.03 percentage points, mainly due to decreases in negotiable certificates of deposit (CD, -0.01 percentage points) and repurchase agreements (RP, -0.10 percentage points).

The overall average loan interest rate at deposit banks (weighted average, based on new contracts) in July was 5.11% per annum, down 0.06 percentage points from the previous month.

Corporate loan interest rates fell by 0.07 percentage points to 5.25%, with large corporations (-0.08 percentage points) and small and medium enterprises (-0.05 percentage points) both seeing declines.

This is believed to be due to the disappearance of the effect of high-interest loans from the previous month and some banks lowering their additional interest rates.

Household loan interest rates decreased by 0.01 percentage points to 4.80%, as mortgage loans rose by 0.02 percentage points due to increases in COFIX and 5-year bank bond rates, while guaranteed loans fell by 0.14 percentage points.

For mortgage loans, variable interest rates (4.45%) rose by 0.04 percentage points, and fixed interest rates (4.22%) increased by 0.02 percentage points.

(Data provided by Bank of Korea)

The 'loan-deposit interest rate spread,' which is the difference between loan interest rates and savings deposit interest rates based on new contracts at deposit banks, narrowed for the fifth consecutive month to 1.43 percentage points.

The proportion of fixed interest rates in household loans expanded by 2.1 percentage points to 52.9% in one month. The Bank of Korea explained this as "an increase in demand for fixed-rate mortgage loans due to strengthened expectations of rising interest rates and widening mortgage loan interest rate spreads."

Deposit interest rates at financial institutions other than banks continued to rise for four consecutive months as efforts to secure funds persisted. Although credit unions (-0.10 percentage points) and mutual finance (-0.01 percentage points) saw slight declines, savings banks rose by 0.05 percentage points.

Loan interest rates turned upward for the first time in six months as the proportion of corporate loans decreased. Savings banks increased by 0.64 percentage points, while credit unions (-0.14 percentage points) and mutual finance (-0.07 percentage points) declined.

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