At the end of March, the mortgage loan rate at deposit banks, based on new lending, was 4.34% a year, having risen for six straight months since October last year (3.98%), the Bank of Korea said on the 28th. It was up 0.02 percentage point from the previous month (4.32%). The increase was attributed to a rise in Treasury bond yields amid the U.S.-Iran war, which pushed up market rates linked to mortgages.
According to the Bank of Korea's released "weighted average rates of financial institutions for March," the savings-type deposit rate at deposit banks was tallied at 2.82%, down 0.01 percentage point. Pure savings deposits fell 0.01 percentage point, and market-type financial products fell 0.01 percentage point.
The lending rate came in at 4.2%, down 0.06 percentage point. Household loans rose 0.06 percentage point, but corporate loans fell 0.06 percentage point. For household loans, not only mortgage loans but also general unsecured credit loans rose 0.02 percentage point to 5.57%. After falling since on Jan. (5.55%), it turned higher for the first time in three months.
Mortgage loan rates rose because Treasury bond yields increased due to the Middle East crisis. Long-term bond yields such as five-year bank bonds (AAA), which serve as the benchmark for fixed-rate mortgages, are heavily influenced by Treasury bonds. The five-year bank bond yield rose 0.32 percentage point from 3.58% in Jan. to 3.9% in March. COFIX, which is linked to variable-rate mortgages, rose 0.04 percentage point over the same period from 2.77% to 2.81%.
Typical borrowers are choosing variable-rate mortgages, which carry lower rates. Although variable-rate mortgages (4.39%) were tallied higher than fixed-rate mortgages (4.32%), variable-rate mortgages are cheaper when excluding policy loans such as the fixed-rate Bogeumjari Loan. In fact, the share of fixed-rate household loans was 35.5% at the end of March, the lowest since Sept. 2022 (33.6%). The fixed-rate share in mortgages was 60.8%, down 10.3 percentage points from the previous month.
Among nonbank financial institutions, deposit rates are rising while lending rates are falling. The one-year time deposit rate at mutual savings banks was 3.22%, up 0.17 percentage point from the previous month (3.05%), while lending was 9.05%, down 0.53 percentage point from the previous month (9.58%).