▲ An advertisement for a mortgage loan is displayed in front of a financial institution in Seoul.
Amid rising market rates, mortgage loan interest rates have risen for two consecutive months, reaching their highest level in two years and seven months.
SME (Small and Medium Enterprise) loan rates saw their largest increase in three years and seven months, while deposit rates climbed back into the 3% range for the first time in one year and five months.
According to the "Weighted Average Interest Rates of Financial Institutions" statistics released by the Bank of Korea today (the 28th), the weighted average interest rate on mortgage loans by depository banks in June (based on newly handled loans) stood at 4.36% per annum, up 0.04 percentage points from the previous month, marking the highest since November 2023 (4.48%).
The overall household loan interest rate also rose by 0.04 percentage points from the previous month to 4.50%.
General unsecured loan rates rose by 0.23 percentage points to 5.72%, the highest since December of last year (5.87%).
The magnitude of the increase is the largest since December of last year (0.41 percentage points).
Jeonse (lump-sum housing deposit) loan rates (4.07%) also rose by 0.10 percentage points.
The proportion of fixed-rate mortgages among all mortgage loans shrank by 3.9 percentage points from the previous month to 37.7%.
Continuing a downward trend for eight consecutive months since November of last year (90.2%), the proportion dropped to its lowest level in 12 years and four months since February 2014 (31.8%).
The proportion of fixed-rate loans among all household loans also decreased by 1.9 percentage points from 24.6% to 22.7%.
Marking an 11-month consecutive decline, it fell to the lowest level in three years and 11 months since July 2022 (21.4%).
Kim Ji-eun, deputy director of the Financial Statistics Team at the Bank of Korea, stated, "While fixed mortgage rates rose due to increases in benchmark yields and Bogeumjari Loan rates, the rising pace of mortgage rates was limited by an increase in the proportion of variable-rate loans, which have relatively lower interest levels."
She added, "In the case of unsecured loans, short-term bank bonds serving as the benchmark yield surged significantly, and with some banks increasing the proportion of loans to mid-to-low credit borrowers, interest rates rose by a larger margin than mortgages."
Regarding the shrinking proportion of fixed-rate mortgages, Lee Hye-young, head of the Financial Statistics Team at the Bank of Korea, said, "As the situation where variable rates remain lower than fixed rates persists, many borrowers are choosing the side with lower rates."
She continued, "Since the gap between variable and fixed rates has persisted until recently, preference for variable rates is expected to continue for the time being. However, as short-term rates affecting variable rates rise by a larger margin due to base rate hikes, the rate gap may narrow, raising the possibility that the proportion of borrowers opting for fixed rates could increase with a time lag."
Regarding concerns over financial stability risks arising from the expansion of the variable-rate proportion, she noted, "Based on outstanding balances, the proportion of fixed-rate loans has not dropped as much as it has for newly handled loans. However, because the proportion of fixed-rate loans is on a downward trend based on newly handled loans, it is worth noting."
Corporate loan interest rates in June stood at 4.27%, up 0.14 percentage points from the previous month, marking the highest level in one year and three months since March of last year (4.32%).
The savings deposit interest rate (based on newly handled amounts) rose by 0.15 percentage points from the previous month to 3.08%.
This is the first time in one year and five months since January of last year (3.07%) that savings deposit rates have climbed back into the 3% range.
Pure savings deposit rates, such as time deposits (3.02%), and market-based financial product rates, such as bank debentures and certificates of deposit (CDs) (3.36%), rose by 0.14 percentage points and 0.23 percentage points, respectively.
The loan-to-deposit rate spread—the difference between lending rates and savings deposit rates based on newly handled amounts by banks—stood at 1.23 percentage points, narrowing by 0.03 percentage points from the previous month and shrinking for the fifth consecutive month.
The loan-to-deposit rate spread based on outstanding balances stood at 2.27 percentage points, down 0.01 percentage points from the previous month.
Deposit rates at non-bank financial institutions (based on 1-year maturity time deposits and deposits) rose across the board at mutual savings banks (3.74%, up 0.35 percentage points), credit cooperatives (3.43%, up 0.18 percentage points), mutual finance (3.10%, up 0.12 percentage points), and Saemaul Geumgo (3.53%, up 0.32 percentage points).
As for lending rates, mutual savings banks (9.48%) and Saemaul Geumgo (4.67%) fell by 0.38 percentage points and 0.21 percentage points, respectively, while credit cooperatives (5.02%) and mutual finance (4.76%) rose by 0.20 percentage points and 0.09 percentage points, respectively.
(Photo: Yonhap News)
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