[Asia Economy Reporter Kim Hyo-jin] As the government and banking sector have begun to actively manage the total volume of loans, household loan interest rates at commercial banks have risen for the second consecutive month. Due to the impact of rising interest rates, the financial authorities have identified that the increase in credit loans within the banking sector is maintaining a relatively stable level.
According to the Bank of Korea on the 28th, the household loan interest rate at deposit banks last month was 2.64% per annum, up 0.05 percentage points from the previous month (2.59%). Household loan interest rates had been continuously declining for several months due to the base interest rate cuts but rebounded in September and have risen for two consecutive months since then.
The mortgage loan interest rate also rose by 0.03 percentage points from September (2.44%) to 2.47%. The general credit loan interest rate was 3.15%, up 0.26 percentage points from September (2.89%). The average interest rate on total loans, combining household and corporate loans, remained steady at 2.66% compared to the previous month.
According to the Financial Services Commission, as of the 23rd of this month (16 business days), the increase in credit loans in the banking sector was identified as 3 trillion KRW. During the same period in August, credit loans increased by 3.1 trillion KRW, in September by 1.9 trillion KRW, and in October by 2.7 trillion KRW.
The Financial Services Commission views that the increase in credit loans in November is being maintained at a level not significantly different from last month.
At the Financial Risk Response Team meeting on the 26th, Do Gyu-sang, Vice Chairman of the Financial Services Commission, stated, "Although there appears to be some front-running demand ahead of the full-scale implementation of measures (on the 30th), the scale is judged to be not large," adding, "The recent increase in credit loans seems to have been influenced by investment fund demand related to major corporate IPOs."
Vice Chairman Do said, "Since banks are making efforts for autonomous management, such as applying the Debt Service Ratio (DSR) at the borrower level first, it is expected that the increase in credit loans will gradually stabilize and household debt can be managed within an appropriate range."
The financial authorities, however, stated that they will closely monitor credit loan trends while making every effort to ensure that difficulties in funding for low-income and genuine demand borrowers do not arise during this process.
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