Weighted average rate for May reaches 4.32% per annum, up 0.01 percentage point
By Kim Byeo-ri, The Herald Business
Mortgage interest rates rebounded within a month, while the share of fixed-rate mortgages fell for seven consecutive months to its lowest level in nearly five years.
According to weighted average interest rate data the Bank of Korea released Friday, the weighted average mortgage rate at deposit-taking banks — based on new lending — stood at 4.32 percent per annum in May, up 0.01 percentage point from the previous month.
Mortgage rates had risen for six consecutive months through March before dipping 0.03 percentage point in April, only to rebound the following month.
The overall household loan rate rose 0.03 percentage point from the previous month to 4.46 percent. The Bank of Korea said the increase reflected higher guaranteed loan rates — from 4.10 percent to 4.11 percent — on top of the mortgage rate rise, as well as a larger share of general credit loans, which carry relatively higher rates.
The general credit loan rate among household loans fell 0.14 percentage point to 5.49 percent, reversing a three-month upward trend. The jeonse loan rate fell 0.04 percentage point to 3.97 percent.
The fixed-rate share of mortgages narrowed 6.2 percentage points from April to 41.6 percent. It has declined for seven consecutive months since November last year, when it stood at 90.2 percent, reaching its lowest level since June 2021, when it was 39.5 percent — a gap of nearly five years.
The fixed-rate share of all household loans shrank 3.2 percentage points to 24.6 percent from 27.8 percent, contracting for 10 consecutive months to its smallest level since July 2022, when it was 21.4 percent.
Lee Hye-young, head of the Bank of Korea's financial statistics team, said fixed mortgage rates rose sharply due to increases in benchmark rates and the Bogeumjari loan rate, but the overall rise was limited as the share of variable-rate lending — which carries lower rates — increased.
She added that long-term bond yields, which serve as the benchmark for fixed rates, have been rising significantly, and the volume of Bogeumjari loans — a fixed-rate product — has been declining, making it unlikely that the fixed-rate share will grow for now.
The corporate loan rate in May fell 0.01 percentage point from the previous month to 4.13 percent. Large corporate loan rates rose 0.01 percentage point to 4.10 percent amid higher short-term market rates, but the rate on loans to small and medium-sized enterprises fell 0.03 percentage point to 4.15 percent, helped by preferential rate support and large volumes of low-interest loans extended by some banks.
The overall bank lending rate, covering both household and corporate loans, fell 0.01 percentage point to 4.19 percent.
The savings deposit rate — based on new deposits — rose 0.01 percentage point from the previous month to 2.93 percent per annum.
The rate on pure savings deposits such as time deposits rose 0.01 percentage point to 2.88 percent, while the rate on market-type financial products including financial bonds and repurchase agreements climbed 0.06 percentage point to 3.13 percent.
The interest rate spread between new lending and savings deposits narrowed 0.02 percentage point from the previous month to 1.26 percentage points. The spread based on outstanding balances, rather than new transactions, was unchanged at 2.28 percentage points.
Among non-bank financial institutions, deposit rates on one-year time deposits rose across the board: mutual savings banks by 0.05 percentage point to 3.39 percent, credit unions by 0.05 percentage point to 3.25 percent, mutual finance cooperatives by 0.05 percentage point to 2.98 percent, and saemaul credit cooperatives by 0.02 percentage point to 3.21 percent.
Lending rates also rose across all non-bank institutions: mutual savings banks climbed 0.24 percentage point to 9.86 percent, credit unions rose 0.06 percentage point to 4.82 percent, mutual finance cooperatives gained 0.22 percentage point to 4.67 percent, and saemaul credit cooperatives advanced 0.18 percentage point to 4.88 percent.
kimstar@heraldcorp.com
