As the Base Interest Rate Rises, 'Bank Savings and Time Deposit Rates Increase One After Another'

Shinhan Bank Raises Interest Rates on 36 Products by up to 0.4%P
Woori Bank Raises Interest Rates on 38 Products by up to 0.3%P
KB Kookmin, Hana, NH Nonghyup Banks Also Reviewing

As the Bank of Korea raised the base interest rate, commercial banks began increasing interest rates on savings and time deposits. The photo shows a notice related to savings and time deposits posted on the exterior wall of a bank in downtown Seoul that day. Photo by Moon Honam munonam@

[Asia Economy Reporter Kwangho Lee] Following the Bank of Korea's base interest rate hike, commercial banks are raising interest rates on savings and time deposits.

According to the financial sector on the 15th, Shinhan Bank and Woori Bank will raise savings and time deposit interest rates by up to 0.3?0.4 percentage points starting on the 17th.

Shinhan Bank will increase interest rates on 36 types of fixed and installment savings deposits by up to 0.40 percentage points.

With this rate hike, the representative product "Annyeong, Bangawo Savings" will have a maximum annual interest rate of 4.4% for a 1-year term, and "Shinhan Franchise Swing Savings," a product that helps self-employed individuals accumulate a lump sum, will have a maximum annual interest rate of 3.0% for a 1-year term.

Additionally, the 1-year term "Shinhan My Home Savings" interest rate will increase by 0.4 percentage points to a maximum of 2.6%, and the 5-year term "Future Planning Crevasse Pension Deposit" for senior customers will have an interest rate increased by 0.3 percentage points to an annual 2.15%.

Woori Bank will also raise interest rates on 18 fixed deposits and 20 savings products by 0.1 to 0.3 percentage points. The "Woori Super Fixed Deposit" interest rate will rise from a maximum of 1.45% to 1.7%, the "Won Savings" from 2.5% to 2.6%, and the "Eusseuk Savings" from 2.05% to 2.35% annually.

A Woori Bank official said, "We promptly raised deposit product interest rates in line with the Bank of Korea's base rate hike and the rise in market interest rates."

KB Kookmin, Hana, NongHyup Banks, and others are also reviewing interest rate hikes on savings and time deposits.

Meanwhile, as deposit interest rates rise, funding costs increase, and loan interest rates are expected to rise sequentially.

As of the 14th, fixed interest rates on mortgage loans at the five major banks?KB Kookmin, Shinhan, Hana, Woori, and NongHyup?have surged to 3.78?5.54% annually. Compared to the end of December last year, the lower bound rose by 0.18 percentage points and the upper bound by 0.56 percentage points. Variable mortgage loan rates also jumped to 3.57?5.07% annually, and credit loan rates reached 3.44?4.73%, with the upper bound nearing 5%.

Professor Sung Tae-yoon of Yonsei University's Department of Economics said, "The base interest rate hike is inevitable from the perspective of overall liquidity management and financial and monetary policy," adding, "Instead of trying to shield vulnerable groups from the burden of the base rate hike solely through financial policy, it is necessary to approach it with policy support through fiscal measures."

Professor Oh Jung-geun of Konkuk University's Department of Economics also advised, "Support for vulnerable groups should come from fiscal measures, but the fiscal situation is not favorable. Therefore, it is necessary to guide appropriate entry into stages such as partial debt relief through debt restructuring."