The Bank of Korea said on the 26th that the mortgage loan rate in July was 4.48%, up 0.12 percentage points from the previous month's 4.36%. It is the highest level in 32 months since November 2023, when it was 4.48%. That is because the Bank of Korea raised the base rate in the same month and bond yields linked to mortgage loan rates have been trending higher.
According to the "weighted average rates of financial institutions in July" released by the Bank of Korea that day, the rate on fixed-rate mortgage loans was 4.76%, up 0.23 percentage points from the previous month's 4.53%. It has risen for 10 straight months since October last year, when it was 3.97%. Fixed-rate mortgage loans include the lower-rate Bogeumjari Loan for vulnerable groups, so rates on general products are estimated to be higher than the statistics. Variable-rate products also rose 0.08 percentage points over the same period to 4.35%.
Mortgage loan rates rose because the linked bond yields increased. The yield on five-year bank bonds (AAA) that affects fixed rates climbed month by month from 4.17% in May to 4.32% in June and 4.39% in July. The COFIX (COFIX), the benchmark for variable-rate mortgage loans, was 2.98% in July, up 0.08 percentage points from the previous month's 2.9%.
As rates surge, more customers are choosing variable-rate products, which have lower interest for now. The share of fixed-rate mortgage loans was 31.9%, down 5.8 percentage points from the previous month's 37.7%. It is the lowest level in 12 years and five months since February 2014, when it was 31.8%.
Jeonse deposit loans also rose to 4.19%, up 0.12 percentage points from the previous month's 4.07%. General unsecured loans recorded 5.97%, up 0.25 percentage points. That is the highest in one year and seven months since December 2024, when it was 6.15%.
The overall household lending rate rose 0.14 percentage points to 4.64%. In contrast, the corporations lending rate fell 0.07 percentage points to 4.2%. Loans to large corporations rose 0.01 percentage points to 4.18%, while loans to small and medium-sized corporations fell 0.16 percentage points to 4.22%.
Rates on savings-type deposits, such as deposits and installment savings, rose 0.13 percentage points to 3.21%. The loan-deposit rate spread (deposit rate minus lending rate), a source of banks' revenue, fell 0.17 percentage points to 1.06%. It has fallen for six straight months since February, when it was 1.43%.