The household loan interest rates fell for the third consecutive month. The interest rates for dwelling mortgages have reversed to a decline after a month. This is attributed to the decrease in the benchmark interest rates of bank bonds and the Cost of Funds Index (COFIX).
According to the Bank of Korea, in its announcement on the 28th regarding the "weighted average interest rates of financial institutions," the average interest rate for household loans from deposit banks (based on new transactions) was recorded at 4.52% last month, a decrease of 0.13 percentage points (p) from the previous month (4.65%). The household loan interest rate has decreased for three consecutive months since December of last year (4.72% and -0.07%p).
The interest rates for household loans, including jeonse funding loans, general credit loans, and dwelling mortgages, have all decreased. The interest rate for jeonse funding loans dropped from 4.16% in January this year to 4.09% last month. During the same period, the general credit loan interest rate decreased from 5.58% to 5.50%, and the dwelling mortgage interest rate decreased from 4.27% to 4.23%. The mortgage interest rate has reversed to a decline after a month.
The impact of the declining benchmark interest rates was significant. According to the Bank of Korea, last month's COFIX was 2.97%, down 0.11%p from the previous month, while the Certificate of Deposit (CD) rate (91 days) fell to 2.95%, a decrease of 0.09%p. The 5-year bank bond yield declined to 2.99%, down 0.01%p.
The interest rates for corporate loans were recorded at 4.43%, down 0.07%. This marks a three-month continuous decline since December of last year (-0.14%p). Large corporations recorded a decrease of 0.07%p to 4.41%, while small and medium-sized enterprises recorded a decrease of 0.08p to 4.45%. All were affected by the decline in short-term market interest rates.
The savings interest rates from deposit banks last month were compiled at 2.97%, down 0.1%p from the previous month. This marks the fifth consecutive month of decline since October of last year (3.37%). The interest rates for pure savings deposits, such as time deposits (-0.11%p), and market-oriented financial products like financial bonds and CDs (-0.07%p) both decreased. The interest rate spread (lending rate - deposit rate) expanded to 0.03%p last month, continuing its increase for six consecutive months since September of last year (1.22%p).
Among non-bank financial institutions, the savings interest rates fell at savings banks (-0.20%p), credit cooperatives (-0.02%p), mutual finance (-0.05%p), and Saemaul Geumgo (-0.03%p). The lending rates decreased at savings banks (-0.66%p) and mutual finance (-0.05%p), while credit cooperatives (+0.00%p) and Saemaul Geumgo (+0.02%p) increased.