October Mortgage Loan Interest Rate 3.26%... Largest Increase in 6 Years and 5 Months

Unsecured Loan Interest Rates Near 5%... Highest in 2 Years and 7 Months

[Asia Economy Reporter Jang Sehee] As the effect of the base interest rate hike takes full effect, the mortgage loan interest rate in October recorded 3.26%, up 0.25 percentage points. This increase is the largest in 6 years and 5 months since May 2015 (0.25 percentage points). The interest rate on unsecured loans also approached 5%, reaching 4.62%.

According to the "Weighted Average Interest Rates of Financial Institutions in October 2021" announced by the Bank of Korea on the 26th, the loan interest rate of deposit banks based on new transactions rose by 0.11 percentage points from 2.96% in the previous month to 3.07% annually. Corporate loans (2.94%) and household loans (3.46%) increased by 0.06 percentage points and 0.28 percentage points, respectively.

The household loan interest rate remained in the 3% range following the previous month. This is due to the rise in benchmark interest rates after the August rate hike and the reduction of preferential interest rates for household loan management.

In fact, interest rates for mortgage loans (+0.25 percentage points), general unsecured loans (+0.47 percentage points), guaranteed loans (+0.17 percentage points), and group loans (+0.52 percentage points) all increased.

In particular, the mortgage loan rate rose by 0.25 percentage points from 3.01% in the previous month to 3.26%. This is the highest level since November 2018 (3.28%). The increase (0.25 percentage points) is also the largest in 6 years and 5 months since May 2015 (0.25 percentage points).

The interest rate on unsecured loans also approached 5%, reaching 4.62%. This is the highest level since March 2019 (4.63%). The increase (0.47 percentage points) is the largest since December 2020 (0.49 percentage points).

The corporate loan interest rate in October also rose as benchmark interest rates generally increased. Both large corporations (+0.03 percentage points) and small and medium enterprises (+0.09 percentage points) saw increases.

The interest rate on savings deposits based on new transactions in October also rose by 0.12 percentage points from 1.17% in the previous month to 1.29%.

The difference between loan interest rates and savings deposit interest rates based on new transactions narrowed by 0.02 percentage points from 2.14 percentage points in the previous month to 2.16 percentage points.

Meanwhile, looking at non-bank financial institutions, both deposit and loan interest rates rose except for mutual savings banks.