Woori Bank 'WON Corporate Fixed Deposit'
1 Year 4.92% 2 Years 5.03%
Reflecting rapidly rising bond market interest rates
Bank raises deposit rates influenced by loan-deposit rate spread disclosure requirements
[Asia Economy Reporter Sim Nayoung] The interest rate on regular savings accounts at commercial banks has reached 5%. This reflects the soaring bond market interest rates, as well as banks raising deposit rates in response to the disclosure of the loan-deposit interest rate spread.
According to the financial industry on the 30th, Woori Bank's 'WON Corporate Regular Savings' product offers an interest rate of 4.92% for a one-year term. For terms of 20 months or longer, the rate exceeds 5.00%. The highest rate for this product is 5.03%, which applies from a two-year term. It is a non-face-to-face product exclusively for corporations and individual business owners, with a subscription amount ranging from 1 million KRW to 5 billion KRW. Individual business owners can receive this rate without any special conditions as long as they have a business registration certificate.
With the emergence of 5% interest rate regular savings products in the first-tier banks, word is spreading quickly among individual business owners. A Woori Bank official explained, "Due to the recent sharp rise in financial bond interest rates influenced by the base rate hike, the interest rates on regular savings, which are directly affected by market rates, are increasing daily."
The highest interest rates on regular savings at other banks are also approaching 4%. Shinhan Bank's Solpyeonhan Regular Savings offers 4.35% without preferential conditions, Hana Bank's Hana Regular Savings is at 4.15%, and KB Kookmin Bank's Group Purchase Regular Savings is around 4.20%.
While rising interest rates are welcome news for depositors, borrowers without extra funds to save find the increase in deposit rates concerning. This is because the rise in deposit rates is likely to boomerang by pushing up loan interest rates. As deposit rates increase, the shock is passed on to COFIX, the basis for calculating mortgage and credit loan interest rates.
COFIX is the weighted average interest rate of funds raised by eight domestic banks. It reflects changes in interest rates of deposit products such as savings accounts, time deposits, and bank bonds handled by banks. When deposit interest rates rise, COFIX also increases. This cycle of 'base rate hike → deposit interest rate rise → COFIX increase → loan interest rate rise' continues to turn.
As deposit interest rates soar, loan interest rates are also rising. As of the 29th, the loan interest rates at commercial banks, based on the upper limit of mixed mortgage rates, have entered the 7% range at Hana Bank (5.859~7.159%) and NH Nonghyup Bank (5.24~7.04%). Credit loan rates for six months are also nearing 7%, with Woori Bank at 5.91~6.81% and KB Kookmin Bank at 5.77~6.77%.
A commercial bank official said, "If the Bank of Korea raises the base rate in October, deposit interest rates will rise further, and by the end of the year, loan interest rates could exceed 8% for mortgages and 7% for credit loans."
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