South Korean banks’ mortgage rates hit highest level in seven years: report

The loan rate averaged 3.63% in December, 0.12 ppt higher than a month earlier.

South Korean banks’ mortgage rates hit their highest level since May 2014 in December, reports Yonhap, according to data from the Bank of Korea (BOK).

Local banks' mortgage loan rate averaged 3.63% a year in December, 0.12 percentage point (ppt) higher from a month earlier and the highest since May 2014.

Mortgage rates have risen after the BOK raised the policy rate in recent months as part of efforts to tighten its long accommodative policy put in place to cushion the fallout from the pandemic, according to Yonhap.

On 14 January, BOK once again raised the benchmark interest rate by another quarter percentage point to 1.25%. This marks the third hike during the pandemic, following increases in August and November 2021.

The central bank may not be done yet, as it hinted at further rate hikes in the coming months.

In contrast to mortgage rates, the country’s unsecured loan rate inched down 0.04 ppt to 5.12% in December 2021.

Meanwhile, the average interest rate of household loans set another record by rising to 3.66% in December from the previous month's 3.61%, according to BOK data.