Mortgage Loan Interest Rates Decline for 8 Consecutive Months... Lowest in 2 Years and 6 Months

Due to the decline in market interest rates, mortgage loan interest rates at banks have continued to fall for eight consecutive months. A bank in downtown Seoul. Photo by Jinhyung Kang aymsdream@

Due to the decline in market interest rates, mortgage loan interest rates in the banking sector have continued to fall for eight consecutive months. Last month, mortgage loan interest rates reached their lowest level in two and a half years since December 2021.

According to the "June 2024 Weighted Average Interest Rates of Financial Institutions" report released by the Bank of Korea on the 31st, the loan interest rate based on new loan amounts at deposit banks last month was 4.71% per annum, down 0.07 percentage points from the previous month.

Household loan interest rates fell by 0.23 percentage points from the previous month to 4.26% per annum. Mortgage loan rates dropped by 0.2 percentage points due to decreases in key benchmark rates such as 5-year bank bonds and COFIX, while general unsecured loans (-0.07 percentage points) and jeonse deposit loans (-0.06 percentage points) also declined.

In particular, last month’s mortgage loan interest rate was 3.71%, the lowest in two and a half years since it recorded 3.63% in December 2021.

The proportion of fixed-rate loans among household loans rose by 5.6 percentage points to 64.2%, driven by an increase in fixed-rate mortgage loans (+1.5 percentage points).

Corporate loan interest rates fell by 0.02 percentage points from the previous month to 4.88%. While rates for large corporations rose slightly (+0.01 percentage points), rates for small and medium-sized enterprises decreased (-0.06 percentage points).

Last month, the interest rate on savings deposits at deposit banks based on new deposits also declined by 0.04 percentage points to 3.51% per annum. Pure savings deposits fell by 0.03 percentage points, mainly in time deposits, while market-type financial products dropped by 0.06 percentage points, centered on financial bonds and negotiable certificates of deposit (CDs).

Meanwhile, deposit and loan interest rates at non-bank financial institutions such as mutual savings banks, credit cooperatives, mutual finance, and Saemaeul Geumgo also declined compared to the previous month.