February Household and Corporate Loan Interest Rates Both Decline... Loan Interest Rates Down 0.11 Percentage Points from Previous Month

Mortgage Loan Interest Rate at 2.52% Per Annum... Up by 0.01 Percentage Points

[Asia Economy Reporter Jang Sehee] In February, both household loans and corporate loans at banks showed a declining trend.

According to the "Weighted Average Interest Rates of Financial Institutions in February 2020" released by the Bank of Korea on the 31st, the household loan interest rate recorded 2.90%, down 0.05 percentage points from the previous month. The corporate loan interest rate was 3.19%, down 0.13 percentage points from the previous month.

Last month, the average interest rate on household loans in the banking sector (based on new contracts) was 3.08% per annum, down 0.11 percentage points from the previous month. This reflects the declining trend in market interest rates.

According to the Bank of Korea's data, the monthly average interest rate on 1-year maturity bank bonds (credit rating AAA) fell from 1.43% per annum in January to 1.31% per annum in February, a decrease of 0.12 percentage points. The interest rate on 91-day negotiable certificates of deposit (CDs) also fell by 0.05 percentage points.

Looking in detail at household loans, the interest rate on mortgage loans in February was 2.52% per annum, up 0.01 percentage points from the previous month. This was due to a reduction in the proportion of low-interest-rate Bogeumjari Loans.

Meanwhile, interest rates on general loans in the secondary financial sector all declined. The general loan interest rates were 10.08% per annum (-0.55 percentage points) for mutual savings banks, 4.21% per annum (-0.06 percentage points) for mutual finance, and 4.20% per annum (-0.02 percentage points) for Saemaeul Geumgo. Credit cooperatives saw a decrease of 0.06 percentage points to 4.21% per annum.