Mortgage Loan Rates Surpass 4.2% for Third Consecutive Month at Year-End

"Weighted Average Interest Rates of Financial Institutions for December 2025"
Mortgage Loan Rate at 4.23% Per Annum...Up 0.06 Percentage Points from Previous Month
Fixed-Rate Household Loan Share Falls to 48.9%, Below 50% for the First Time in a Year

The interest rates on mortgage loans handled by banks have been rising for three consecutive months, surpassing 4.2%. This trend is attributed to an increase in market rates, such as bank bonds, which serve as benchmark rates. However, the increase has been limited by a higher proportion of Bogeumjari Loans, which offer relatively lower interest rates. Not only mortgage loans, but also rates on jeonse deposit loans and general credit loans have risen, resulting in overall household loan rates climbing for the third straight month.

According to the "Weighted Average Interest Rates of Financial Institutions for December 2025" released by the Bank of Korea on January 27, the mortgage loan rate (based on new loans) at deposit banks last month was 4.23% per annum, up 0.06 percentage points from the previous month.

The mortgage loan rate, which climbed to 4.27% in January last year, declined from February to May, rose in June and July, remained flat in August and September, and then continued to rise in October, November, and December. The rate has now returned to the level seen in February last year (4.23%). Kim Minsoo, Head of the Financial Statistics Team at the Economic Statistics Department 1 of the Bank of Korea, explained, "Although the five-year bank bond rate, a benchmark rate, rose by 0.19 percentage points in December last year, the increase in the share of Bogeumjari Loans, which have relatively lower rates, limited the overall rise." Specifically, the fixed-rate mortgage loan rate was 4.22%, and the variable-rate mortgage loan rate was 4.32%, up 0.05 and 0.14 percentage points, respectively, from the previous month.

The jeonse deposit loan rate stood at 3.99% per annum, up 0.09 percentage points from the previous month. As the benchmark bank bond rate increased, the jeonse loan rate has now risen for three consecutive months since October last year (3.78%). The general credit loan rate was 5.87% per annum, up 0.41 percentage points during the same period. This is the highest level since December 2024 (6.15%). The rate has now increased for two consecutive months since November last year (5.46%). This trend is due to the rise in short-term bank bond rates, which serve as a benchmark, as well as an expansion of loans to borrowers with medium to low credit scores, who typically face higher interest rates, at some banks.

Including these, the household loan rate was 4.35% per annum, up 0.03 percentage points from the previous month. This marks the third consecutive monthly increase since October last year (4.24%).

The corporate loan rate was 4.16% per annum, up 0.06 percentage points from the previous month. This is the second consecutive monthly rise since November last year (4.10%). The increase in short-term market rates has led to higher loan rates for both large corporations and small and medium-sized enterprises. As negotiable certificates of deposit (CDs) with a 91-day maturity and short-term bank bonds have risen, the rate for large corporations (4.08%) and for small and medium-sized enterprises (4.24%) have both increased.

Whether loan rates will continue to rise this month remains to be seen. Kim commented, "So far this month, the five-year bank bond rate has inched up by 0.04 percentage points, while short-term market rates have fallen by around 0.1 percentage points. Considering that banks, which had imposed year-end lending caps, are resuming lending in the new year, it is necessary to monitor the situation in January further."

The interest rate on time and savings deposits (based on new deposits) was 2.90%, up 0.09 percentage points from the previous month, as time deposits and similar products saw increases. This marks the fourth consecutive monthly rise since September last year (2.52%). By category, the pure savings deposit rate, centered on time deposits, rose by 0.11 percentage points to 2.89% per annum. The market-type financial product rate, focused on CDs and financial bonds, increased by 0.05 percentage points to 2.95%.

The loan-deposit interest rate spread (based on new loans) narrowed by 0.05 percentage points to 1.29%, as the rise in loan rates was limited compared to deposit rates. On a balance basis, the loan-deposit spread widened by 0.04 percentage points to 2.23%.

Meanwhile, the proportion of fixed-rate household loans fell by 5.7 percentage points from the previous month to 48.9%, due to a decrease in fixed-rate mortgage loans and fixed-rate jeonse deposit loans. This marks the fifth consecutive monthly decline since August last year (62.2%), and the first time in a year that the share has dropped below 50%, since December 2024 (46.8%). Kim noted, "This is the result of fixed rates being slightly higher than variable rates due to the rise in benchmark rates." The proportion of fixed-rate mortgage loans dropped by 3.6 percentage points to 86.6%.

Among non-bank financial institutions, the deposit interest rate for one-year time deposits rose across the board: savings banks (up 0.27 percentage points), credit unions (up 0.05 percentage points), mutual finance (up 0.06 percentage points), and community credit cooperatives (up 0.08 percentage points). The loan rate (for general loans) decreased for credit unions (-0.19 percentage points), mutual finance (-0.08 percentage points), and community credit cooperatives (-0.13 percentage points), except for savings banks, which saw an increase of 0.03 percentage points.