Last Month's 'Loan and Deposit' Interest Rates Rise After 3 Months... Mortgage Loans Increase for 4 Consecutive Months↑

The Bank of Korea Announces Weighted Average Interest Rates of Financial Institutions for September

Last month, loan and deposit interest rates in the banking sector turned upward for the first time in three months. Household loan rates and mortgage loan (Judaemdae) rates also recorded consecutive increases for two and four months, respectively.

According to the 'Weighted Average Interest Rates of Financial Institutions' statistics released by the Bank of Korea on the 27th, the average interest rate on savings deposits (weighted average, based on new contracts) at deposit banks in September was 3.81% per annum, up 0.16 percentage points from the previous month, marking the highest level since January this year.

The pure savings deposit interest rate also rose by 0.15 percentage points, centered on time deposits (0.15 percentage points), reaching 3.74%, the highest since January this year. Market-type financial product rates also increased by 0.17 percentage points to 3.96%, the highest this year, mainly due to negotiable certificates of deposit (CDs, 0.26 percentage points) and financial bonds (0.12 percentage points).

Seo Jeong-seok, head of the Bank of Korea's Financial Statistics Team, explained, "This is due to the rise in market interest rates and the expansion of preferential deposit rates."

The overall average loan interest rate at deposit banks in September (weighted average, based on new contracts) rose by 0.07 percentage points from the previous month to 5.17%, due to the increase in major benchmark interest rates.

Corporate loan rates increased by 0.06 percentage points to 5.27%, mainly driven by a 0.10 percentage point rise in small and medium-sized enterprise loan rates, influenced by the rise in benchmark rates such as CDs.

Household loan rates rose by 0.07 percentage points from the previous month to 4.9% per annum, with increases across mortgage loans, jeonse deposit loans, and general unsecured loans.

Mortgage loan rates rose for the fourth consecutive month to 4.35%, influenced by the increase in the 5-year bank bond rate, a benchmark interest rate. By interest rate type, fixed-rate loans increased by 0.05 percentage points to 4.30%, showing a larger rise than variable-rate loans, which increased by 0.01 percentage points to 4.51%. While the COFIX rate slightly declined, the rise in bank bond and special Bogeumjari loan rates contributed to this increase.

Jeonse deposit loan rates rose by 0.04 percentage points over the month to 4.18%, and general unsecured loan rates increased by 0.06 percentage points to 6.59%.

The 'loan-deposit interest rate spread,' which is the difference between loan rates and savings deposit rates based on new contracts at deposit banks, narrowed from 1.45 percentage points in August to 1.36 percentage points last month, as deposit rates rose more sharply than loan rates.

The proportion of fixed-rate household loans fell by 1.9 percentage points over the month to 52.2%, marking a decline for the first time in three months. The Bank of Korea explained, "This is due to a 1.3 percentage point decrease in the share of fixed-rate mortgage loans (75.2%) following the narrowing of mortgage loan rate spreads."

Deposit rates at non-bank financial institutions (based on 1-year fixed-term deposits) all increased. Mutual savings banks and credit cooperatives rose by 0.06 percentage points each, mutual finance by 0.05 percentage points, and Saemaeul Geumgo by 0.04 percentage points.

Loan rates based on general loans also rose at all non-bank financial institutions except mutual savings banks. Mutual savings banks saw a 0.58 percentage point decline due to a relatively larger share of corporate loans with lower interest rates, while credit cooperatives increased by 0.05 percentage points, mutual finance by 0.01 percentage points, and Saemaeul Geumgo by 0.12 percentage points.

On the 23rd, as domestic market interest rates and bank loan interest rates rapidly rise, a banner displaying loan interest rates is hung on the exterior wall of a commercial bank in Seoul. Photo by Jinhyung Kang aymsdream@

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