Fixed rates on mortgage loans at major commercial banks have topped 7%. As concerns about inflation from the Middle East war raised the likelihood of a benchmark rate hike, market rates climbed quickly.
According to the financial sector on the 29th, as of the 27th, the mixed (fixed) rates on mortgage loans at the five major banks—KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup—based on 5-year bank bonds were tallied at an annual 4.410% to 7.010%. It is the first time in 3 years and 5 months since Oct. 2022 that the upper end of fixed rates has exceeded 7%.
Compared with late Dec. last year (annual 3.930% to 6.230%), the upper end has risen 0.780 percentage points (p) and the lower end 0.480 p so far this year. Over the same period, the 5-year bank bond yield also climbed 0.670 p, from 3.499% to 4.119%.
Market rates have been accelerating again recently due to the Middle East situation. In the month since the United States began strikes on Iran in late February, the 5-year bank bond yield jumped 0.547 p. Fixed rates on mortgage loans also increased 0.310 p.
Experts said that if the Middle East crisis drags on, it is hard to rule out the possibility that major Central Bank authorities will raise rates due to inflationary pressure.
Lee Seung-hoon, head of the Economic Research Center at KB Financial Group Research Institute, said, "Depending on the future course of the conflict in the Middle East, if the rise in oil prices widens and high oil prices persist longer than expected, the possibility of rate hikes could be raised to prepare for a renewed spread of inflation expectations."
He added, "The Bank of Korea (BOK) is cautious, but if an uptrend in prices continues for more than three months due to prolonged high oil prices, the need for rate hikes could come to the fore starting in the third quarter of this year."