The Bank of Korea said on the 29th that the weighted average lending rate on mortgage loan (ju-dam-dae) for new handling amounts at deposits banks in April fell 0.03 percentage point to 4.31% from the previous month's 4.34%. After rising for six straight months since October last year, it edged down. However, with Treasury bond yields that are linked to recent household loans rising, the possibility cannot be ruled out that it will turn upward again in May.
According to the "April financial institution weighted average rates" released by the Bank of Korea that day, the variable-rate mortgage loan rate fell 0.11 percentage point to 4.28% from the previous month. In contrast, the fixed-rate mortgage loan rate rose 0.02 percentage point to 4.34%. The fixed rate has risen for seven consecutive months since October last year. Fixed rates include policy loans such as the Bogeumjari Loan, and the increase was due to higher policy loan lending rate.
Customers seeking new mortgage loans are choosing variable-rate products with cheaper interest. The share of fixed rates in total mortgage loans was 47.8%, down 13 percentage points from the previous month. That is the lowest since July 2021 (43.9%). The share of fixed-rate products in total household loans also fell to 27.8%, the lowest since July 2022 (21.4%).
A Bank of Korea official said, "In April, the rise in Bogeumjari Loan rates had the effect of increasing fixed rates," and noted, "With fixed rates higher than variable rates, borrowers had a factor to choose the side with lower rates."
There is an outlook that mortgage loan rates could rise again in May. That is because Treasury bond yields linked to mortgage loans are on an upward trend. The COFIX rate linked to variable-rate mortgage loans rose 0.07 percentage point from 2.82% in February to 2.89% in April. The five-year bank bond (credit rating AAA) yield, which affects fixed-rate mortgage loans, rose 0.15 percentage point over the same period from 3.73% to 3.88%.
The overall household lending rate, including mortgage loans, was 4.43%, down 0.08 percentage point from the previous month. General unsecured loans were 5.63%, up 0.06 percentage point from the previous month. It has risen for two consecutive months since March.
The overall lending rate, including household loans and corporations loans, was 4.2%, the same as the previous month. Corporations loans were also unchanged at 4.14%. Among corporations loans, the lending rate for large corporations fell 0.02 percentage point to 4.09%, while loans to small and midsize corporations rose 0.01 percentage point to 4.18%.