4% Range Interest Rates Prevail
Noticeable Decrease in 5~6% Loan Proportion
As market interest rates at commercial banks have fallen, household loans with interest rates in the 4% range have become the norm. The proportion of loans with interest rates in the 5-6% range is noticeably decreasing. The lower bound of mortgage loan interest rates at commercial banks has now dropped to the 3% range.
According to the 'Deposit Banks Loan Proportion by Interest Rate Level' from the Bank of Korea's Economic Statistics System on the 4th, when the amount of new loans issued by banks in February is set to 100, 60.9% of these loans had interest rates between '4% and less than 5%'. Loans with interest rates '5% to less than 6%' accounted for 20.6%, and those '6% to less than 7%' were only 8.2%.
Looking at the loan interest rate proportions in November, when the bond market became unstable following last year's Legoland incident and commercial bank interest rates rose sharply, the largest share was '5% to less than 6%' (37.1%). This was followed by '4% to less than 5%' (28.6%) and '6% to less than 7%' (11.3%). Compared to recent figures, the proportion of loans with 5% interest rates was much higher at that time.
The increase in 4% loans also means that interest rates have fallen accordingly. After the U.S. Silicon Valley Bank (SVB) incident, expectations that the U.S. would halt its benchmark interest rate hikes stabilized the bond market, and under pressure from South Korean financial authorities, banks lowered their additional interest rates.
Since the end of March, mortgage loan interest rates at commercial banks have dropped to the 3% range and this trend has continued. As of the 3rd, the mixed-rate mortgage loans (products with a 5-year fixed rate followed by a variable rate) at the five major banks (KB, Shinhan, Hana, Woori, NH) ranged from 3.69% to 5.94%.
A representative from a commercial bank said, "Mixed-rate mortgage loans in the 3% range have reappeared for the first time in a year since February last year," adding, "Interest rates on unsecured loans are also trending downward." One month ago, unsecured loan interest rates were in the high 5% to high 6% range, but they have now fallen to the low 5% to low 6% range.
As bank loan interest rates decline, financial consumers who were considering policy financial products such as the Special Bogeumjari Loan operated by the Korea Housing Finance Corporation are becoming confused. This month's interest rates for the Special Bogeumjari Loan are 4.15% to 4.45% for the general type and 4.05% to 4.35% for the preferential type. Until early last month, these rates were relatively low and popular, but now, considering that commercial bank mortgage loan rates are in the 3% range, there are criticisms that these products lack competitiveness.
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