Refer Report
Last month, mortgage loan interest rates rebounded for the first time in 10 months. Although the index interest rate, which is the standard for mortgage interest rates, has fallen, this is believed to be the result of banks actively raising the added interest rate under pressure from financial authorities who ordered household loan speed management.
According to the ‘Financial Institutions Weighted Average Interest Rate’ statistics announced by the Bank of Korea on the 27th, deposit banks’ August household loan interest rate (based on new loan amounts) was 4.08% per annum, 0.02 percentage points higher than July (4.06% per annum). This is the first upward turn in three months since last June.
Among household loans, housing mortgage loans rose 0.01 percentage points from 3.50% to 3.51%. This is a rebound after 10 months. The 5-year bank bond interest rate, which is a major indicator interest rate, fell by 0.14 percentage points from 3.36% per annum in July to 3.22% per annum last month, but the additional interest rate added by banks increased significantly.
Kim Min-soo, head of the Bank of Korea’s financial statistics team, explained the reason for the rise in household loan interest rates, saying, “As household loans rapidly increased, banks raised additional interest rates for soundness management, etc.” The market believes that this phenomenon occurred when the financial authorities ordered banks to manage household debt at the end of July. However, it is unclear whether the rise in household loan interest rates will continue beyond September. This is because the lending policy of banks has also changed since August, with the authorities criticizing the increase in additional interest rates as an ‘easy method’.
The corporate loan interest rate (4.67% per annum) fell by 0.11 percentage points. The interest rate for large corporations (4.78% per year) was lowered by 0.11 percentage points, and the interest rate for small and medium-sized businesses (4.59% per year) was also lowered by 0.10 percentage points. The phenomenon of interest rate reversal between small and medium-sized enterprises and large corporations also continued. The overall banking lending interest rate fell by 0.07 percentage points from 4.55% to 4.48% in one month.
The deposit bank’s savings receiving (deposit) interest rate (based on new transaction amount) was also 3.35% per annum, down 0.06 percentage points from July (3.41% per annum). The difference between the loan interest rate based on the bank’s new transaction amount and the deposit interest rate difference, that is, the deposit-loan interest rate difference, decreased by 0.01% point from the previous month (1.14% point). This is because the decline in lending interest rates was greater. The interest rate difference between deposits and loans based on balance was also reduced by 0.04 percentage points from 2.31 percentage points to 2.27 percentage points.
Reporter Kang Jin-gyu josep@hankyung.com
Source: Korean