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S.Korea's household lending rate hits 6-month low. But lending rates have risen steadily in the second financial sector.

By September 28, 2018 at 9:00 am
Bank (Photo : Yonhap news)

The bank's household lending rate fell to its lowest level in six months. Last month, banks' household lending rates fell sharply, mainly in mortgages and collective lending. The market interest rate has fallen and the handling of low interest rate group loans in the Seoul metropolitan area has expanded. On the other hand, borrowing rates for the second financial sector, where relatively low income and low credit ratings are sought, have risen in most cases.

According to the Bank of Korea (BOK) announced on August 28, the weighted average interest rate for financial institutions in August 2018 was 3.67 percent, down 0.07 percentage points from the previous month. Household interest rates rose to 3.73% in July from 3.72% in June, but turned back down.
Last month's rate was the lowest since February of 3.65%. In detail, the interest rate on bank mortgages decreased by 0.08 percentage point to 3.36 percent. The mortgage interest rate was also the lowest since October last year (3.33%).

The average interest rate on loans (4.47 percent) was 0.09 percentage points, group loans (3.41 percent) were 0.11 percentage points, and micro loans (4.48 percent) less than 5 million won were down 0.16 percentage points.

"The market interest rate, which is an indicator of the lending rate, has declined, and the interest rate on household loans has fallen in some areas of the metropolitan area because of low interest rate group loans."
The interest rate on corporate loans also dropped by 0.02 percentage point from 3.62 percent a month ago. The lending rate of large corporations dropped by 0.02 percentage points to 3.25 percent, while that of small and medium enterprises declined 0.03 percentage point to 3.83 percent.

The average interest rate on deposit banks, which includes corporate, household, public and other sectors, dropped by 0.04 percentage points to 3.63 percent. Deposit bank lending rates were also the lowest since December's 3.62%.

Savings bank deposit interest rates fell 0.01 percentage points to 1.81%. The difference between the deposit and the loan rate was 2.33 percentage points, the same level as the previous month.

However lending rates have risen steadily in the second financial sector.

Mutual savings bank lending rate rose by 0.07 percentage points to 10.99 percent. This is the highest level since January (11.42%). The credit cooperative lending rate climbed 0.06 percentage points to 4.96 percent, the highest level since March 2015 (5.02 percent).

Mutual finance loan interest rate (4.11%) rose 0.04%, and Saemaeul Loan lending rate (4.28%) was same as previous month.

The deposit interest rate rose only 0.03 percentage point in credit cooperatives (2.50%). Mutual savings banks (2.64%), mutual financing (2.16%) and Saemaeul Bank (2.42%) remained unchanged a month ago.
A bank official said, "Non-bank interest rates tend to follow trends with banks, but tend to follow." 

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