Mortgage loan lending rates topped 4% for the first time in eight months. As government bond yields jumped on expectations that the rate-cut cycle has ended, mortgage loan rates climbed in tandem. Household loans lending rates also rose for the second straight month.
According to the "weighted average interest rates of financial institutions" statistics released by the Bank of Korea on the 29th, the mortgage loan lending rate for new lending by deposit banks last month was 4.17%, up 0.19 percentage point from the previous month. It is the first time in eight months that mortgage loan rates have exceeded 4%, since March (4.17%).
Rates on jeonse deposit loans and unsecured loans also rose. The jeonse deposit loan lending rate increased from 3.78% to 3.9%, and unsecured loans climbed from 5.19% to 5.46%. The jeonse deposit loan lending rate rose for the second consecutive month, and the unsecured loan lending rate rebounded for the first time in three months since Aug. (+0.07 percentage point, 5.41%).
As these rates rose in tandem, overall household loans lending rates also increased. Last month, the household loans lending rate was 4.32%, up 0.08 percentage point from the previous month. It has risen for two straight months since Oct. (+0.07 percentage point, 4.24%).
Kim Min-su, a Bank of Korea (BOK) financial statistics team leader, said, "In November, benchmark rates such as government and bank bond yields rose sharply as the path of changes in expectations for currency policy was reflected," adding, "There is a possibility that lending rates will rise in December as long-term and short-term rates have been increasing through last week."
After BOK Governor Rhee Chang-yong mentioned a "pivot" on the base rate in an interview with foreign media last month, the market even priced in a rate hike, sending the three-year government bond yield surging into the 3% range. The phrase "rate-cut stance" was also removed from the statement on the monetary policy stance released at the end of November by the Bank of Korea's monetary policy committee.
Corporate lending rates also rose. In November, the corporate lending rate was 4.1%, up 0.14 percentage point from the previous month (3.96%), turning higher for the first time in six months. Lending rates rose for both large corporations (3.95%→4.06%) and small and midsize corporations (3.96%→4.14%). Across households and corporations, the overall bank lending rate (4.15%) increased by 0.13 percentage point.
Last month, the interest rate on time and savings deposits at deposit banks was 2.81%, up 0.24 percentage point from the previous month. It has risen for two straight months since Oct. (+0.05 percentage point, 5%). The spread between lending rates and time and savings deposit rates was 1.34%, down 0.11 percentage point from the previous month.