Bank Mortgage Loan Rates Rise 'Silently'... Lowest Annual Rate at 2.31%

Adjusting the Pace of Household Loans, Reducing Preferential Benefits
Actual Handling Interest Rate Expected to Be in the Mid-to-High 2% Range Annually

Yonhap News

[Asia Economy Reporter Kim Min-young] Bank mortgage loan interest rates are expected to rise 'silently.'

According to the Bankers Association on the 18th, the average interest rate for installment-type mortgage loans (with a maturity of 10 years or more) from the five major banks last month (Shinhan, KB Kookmin, Hana, Woori, and NH Nonghyup Bank) was recorded at 2.51% per annum.

By each bank, Nonghyup Bank had the lowest rate at 2.42%, followed by Hana at 2.45%, Kookmin at 2.51%, Shinhan at 2.52%, and Woori at 2.66%.

The mortgage loan disclosure last month was calculated based on loans newly issued in August.

As the COFIX (Cost of Funds Index), which serves as the benchmark for variable-rate mortgage loans in the banking sector, rose for the first time in 10 months, the mortgage loan interest rate range of major commercial banks linked to it has slightly increased, suggesting that the actual rates applied going forward will rise.

According to the banking sector, Kookmin, Woori, and Nonghyup Banks raised their variable-rate mortgage loan interest rates based on new loan amounts by 0.08 percentage points each from the 16th compared to the previous day.

Kookmin Bank applied interest rates of 2.70?3.90% from the 16th, up from 2.62?3.82% based on the new COFIX standard. Woori Bank adjusted from 2.54?3.84% to 2.62?3.92%, and Nonghyup Bank raised rates from 2.23?3.64% to 2.31?3.72%.

The COFIX based on new loan amounts announced by the Bankers Association for September was 0.88%, up 0.08 percentage points from August, and this increase was fully reflected.

Shinhan Bank applied interest rates of 2.73?3.98% based on both new and outstanding loan balances, raising rates by 0.10 percentage points compared to before.

Hana Bank, which uses the 6-month financial bond as a benchmark, set its variable mortgage loan interest rate based on new loan amounts at 2.623?3.923% per annum on the day, an increase of 0.011 percentage points from a month ago.

This year, as COFIX fell consecutively due to the novel coronavirus disease (COVID-19), bank mortgage loan interest rates also declined accordingly. In July, one bank lowered its mortgage loan interest rate range to the lowest 1% level. However, since then, banks have reduced various preferential benefits to slow down household loans, so the actual perceived increase by customers at branches is expected to be greater going forward.