Loan interest rates scarier than the cold... Average interest rate on unsecured loans exceeds 7%

[Image source=Yonhap News]

[Asia Economy Reporter Buaeri] Major commercial banks' average annual interest rate on credit loans handled last month reached 7%.

According to the Bankers Association on the 24th, the average annual interest rate on credit loans handled by the five major banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?as of November was 7.016%.

The average interest rate on credit loans excluding microfinance was about 6.688% per year. This average rate refers to the average interest rate of general credit loans excluding microfinance products such as mid-interest rate loans recognized by the Financial Services Commission and policy financial products for low-income earners like Saehopeum Holssi.

Looking at the credit loan interest rates by bank (excluding microfinance), NH Nonghyup Bank had the highest average rate at 7.26% per year. It was followed by Shinhan Bank at 6.73% and KB Kookmin Bank at 6.57%. Next were Hana Bank (6.45%) and Woori Bank (6.43%).

In October, a month earlier, KB Kookmin Bank and Hana Bank recorded interest rates in the high 5% range at 5.99% and 5.79%, respectively, but all surpassed 6% in November. The rates rose by 0.42 to 0.75 percentage points within a month. By bank, NH Nonghyup Bank had the largest increase of 0.75 percentage points, followed by Hana Bank (0.66 points), Shinhan Bank (0.63 points), KB Kookmin Bank (0.58 points), and Woori Bank (0.42 points).

Even high-credit borrowers with credit scores above 951 received interest rates in the mid-6% range. Last month, the average interest rate on credit loans applied to high-credit borrowers was between 6.11% and 6.55% per year.

Borrowers with low credit scores took out credit loans from commercial banks at rates exceeding 10% per year. Borrowers with credit scores of 650 or below received loans at rates ranging from 7.83% to 10.13%. For those with scores below 600, the rates were between 10.01% and 11.73%.

However, due to recent pressure from financial authorities such as comprehensive loan interest rate surveys, loan interest rates have somewhat stalled, but how long this trend will last is uncertain. If the Bank of Korea raises the base interest rate further, loan interest rates may surge again. In particular, in its 2023 Monetary and Credit Policy Direction announced the day before, the Bank of Korea indicated the possibility of an additional rate hike by stating, "Next year's base interest rate will continue to focus on price stability so that the inflation rate converges to the target level (2%)."