[Bank Status Report] Top 5 Banks' Household Loan Interest Rates Jump Nearly 2%P in 2 Years

The household loan interest rates of the five major banks have risen by nearly 2 percentage points over the past two years.

According to the "Bank Management Status Disclosure Report" released by the Korea Federation of Banks on the 1st, the average household loan interest rate of the five major banks (KB Kookmin, Shinhan, Woori, Hana, NH Nonghyup) last year was recorded at 4.51% (based on new loan disbursements, simple average calculation). This is an increase of 1.89 percentage points compared to 2.62% in 2020, two years ago. Compared to the previous year, it rose by 1.49 percentage points. Based on outstanding balances, the rate was 4.53%, up 1.8 percentage points from two years ago and 1.58 percentage points from the previous year. The interest rate based on new loan disbursements was calculated as the weighted average of the execution rates of newly disbursed loans, while the balance-based rate was calculated as the weighted average of the rates applied at the end of the respective year.

Looking at the average household loan interest rates (based on new loan disbursements) by bank last year, Shinhan Bank had the highest rate at 5.3%, followed by Woori Bank at 4.42%, KB Kookmin Bank at 4.41%, Hana Bank at 4.32%, and NH Nonghyup Bank at 4.12%. Based on outstanding balances, Hana Bank had the highest rate at 4.66%, followed by Shinhan Bank (4.65%), NH Nonghyup Bank (4.46%), KB Kookmin Bank (4.49%), and Woori Bank (4.37%).

The banks explained that the rise in average won-denominated loan interest rates was due to the increase in the Bank of Korea's base rate and the growing proportion of loans to low- and medium-credit borrowers. In particular, the average interest rate based on outstanding balances was said to have responded sensitively to changes in market interest rates, linked to the proportion of variable-rate loan balances.

Internet-only banks, which are relatively more used by low- and medium-credit borrowers, also had higher average household loan interest rates compared to commercial banks, with a larger increase. The average household loan interest rate of KakaoBank, K Bank, and Toss Bank last year was 5.72% based on new loan disbursements. This is an increase of 1.53 percentage points compared to the previous year. Based on outstanding balances, it was 6.18%, up 2.05 percentage points from the previous year.

By bank, based on new loan disbursements, Toss Bank had the highest rate at 6.99%, followed by K Bank (5.61%) and KakaoBank (4.56%). Based on outstanding balances, the order was Toss Bank (7.65%), K Bank (6.37%), and KakaoBank (4.51%).

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