Last month, the household lending rate turned upward for the first time in a year. As banks tightened total household loan volume controls, the handling of mortgage loan applications decreased, while general unsecured loans, which carry relatively higher rates, increased.
According to the "financial institutions' weighted average interest rates" released by the Bank of Korea on the 26th, the household lending rate (based on newly extended amounts) at deposits banks last month was 4.24%, up 0.07 percentage point (p) from the previous month. It was the first rise in a year since November last year (up 0.24 percentage point to 4.79%).
By product, the mortgage loan rate rose 0.02 percentage point to 3.98% from the previous month, returning to an uptrend for the first time in three months. The jeonse loan lending rate also climbed 0.02 percentage point to 3.78%, rebounding for the first time in a month. In contrast, the general unsecured loan rate fell 0.12 percentage point to 5.19%, extending a two-month decline.
On the backdrop to the overall rise in the household lending rate, the Bank of Korea (BOK) emphasized the impact of changes in loan composition. An official at the BOK said, "As banks strengthened total volume controls, newly extended mortgage loan amounts decreased and the share of unsecured loans increased," adding, "Although unsecured loan rates fell, they remain higher than the overall average and pulled up the household lending rate."
The corporate lending rate fell 0.03 percentage point to 3.96% from the previous month, marking a fifth straight month of declines. Although short-term market rates rose, lending rates for both large corporations (down 0.08 percentage point) and small and medium-sized corporations (down 0.01 percentage point) edged lower, helped by expanded policy finance. The overall bank lending rate, including households and corporations, fell 0.03 percentage point to 4.03% from the previous month.
At deposits banks, the rate on savings-type deposits rose 0.04 percentage point to 2.56%, logging a second straight monthly gain. Rates on pure savings deposits such as time deposits rose 0.04 percentage point, while rates on market-type financial products such as CDs and financial debentures increased 0.07 percentage point. As a result, the gap between lending rates and savings-type deposit rates narrowed by 0.06 percentage point from the previous month to 1.45 percentage points.
Meanwhile, deposit rates at nonbank financial institutions all fell. Rates declined at savings banks (down 0.19 percentage point), credit unions (down 0.02 percentage point), mutual finance institutions (down 0.02 percentage point), and the Korean Federation of Community Credit Cooperatives (KFCC) (down 0.03 percentage point). Lending rates diverged by institution: savings banks (up 0.81 percentage point) and the Korean Federation of Community Credit Cooperatives (KFCC) (up 0.29 percentage point) rose, while credit unions (down 0.06 percentage point) and mutual finance institutions (down 0.08 percentage point) fell.