Mortgage Loan Interest Rate Down 0.11%P to 4.63%
[Asia Economy Reporter Seo So-jung] Due to consecutive increases in the base interest rate, the average household loan interest rate at banks rose by 0.03 percentage points last month, reaching the highest level in 10 years and 9 months.
According to the "Weighted Average Interest Rate of Financial Institutions" statistics released by the Bank of Korea on the 27th, the household loan interest rate (weighted average, based on new loans) at deposit banks in December last year was 5.60% per annum, up 0.03 percentage points from the previous month. This is the highest level since March 2012 (5.62%), marking 10 years and 9 months.
Last month, the interest rate on mortgage loans within household loans fell by 0.11 percentage points from 4.74% in November to 4.63% in December. However, the interest rate on guaranteed loans rose by 0.47 percentage points due to an increase in the proportion of medium- and low-credit borrowers, and the interest rate on general unsecured loans increased by 0.12 percentage points, resulting in an overall rise of 0.03 percentage points compared to the previous month.
The proportion of fixed-rate loans among household loans at deposit banks, based on new loans in December, was 43.2%, up 6.4 percentage points from 36.8% in the previous month. The Bank of Korea explained that the increase in fixed-rate loans was due to a rise in the handling of Safe Conversion Loans, which convert variable-rate loans to fixed-rate loans, and the highlighted benefits of fixed-rate loans.
The corporate loan interest rate (5.56%) fell by 0.11 percentage points due to a decline in benchmark rates such as bank bonds and an increase in the proportion of short-term loans.
The interest rate on large corporate loans decreased by 0.09 percentage points to 5.32%, and the interest rate on small and medium-sized enterprise loans also fell by 0.17 percentage points to 5.76%.
The average overall loan interest rate (weighted average, based on new loans) at deposit banks, combining corporate and household loans, was 5.56%, down 0.08 percentage points from 5.64% in November.
The average interest rate on savings deposits at deposit banks fell by 0.07 percentage points from 4.29% to 4.22% per annum. Park Chang-hyun, head of the Financial Statistics Team at the Bank of Korea, explained, "The decline compared to the previous month was due to a reduction in deposit competition influenced by falling market interest rates, financial authorities' recommendation to restrain deposit interest rate hikes, and the resumption of bank bond issuance."
The loan interest rate fell by 0.08 percentage points from 5.64% to 5.56% per annum. Both deposit and loan interest rates turned downward for the first time since January (-0.05 percentage points) and March (-0.01 percentage points) 2022, respectively.
The interest rate spread between loans and deposits, known as the loan-deposit margin, based on new loans at deposit banks, narrowed by 0.01 percentage points to 1.34 percentage points after one month. The decline in loan interest rates (-0.08 percentage points) was greater than that of deposit interest rates (-0.07 percentage points), resulting in a reduction of the loan-deposit interest rate gap by 0.01 percentage points.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
