Last month, mortgage loan rates saw a slight increase. Although fixed rates rose significantly, the share of variable rates increased, limiting the overall rise.
According to the Bank of Korea's 'Weighted Average Interest Rate' statistics released on June 26, the weighted average mortgage loan rate for commercial banks in May was 4.32%, up 0.01 percentage points from the previous month.
Lee Hye-young, head of the Bank of Korea's Financial Statistics Team, explained, "While benchmark rates and the government-backed mortgage loan rates increased significantly, the rise was moderated by a greater share of relatively lower variable rates."
The interest rate for jeonse (long-term lease) loans decreased by 0.04 percentage points to 3.97%. Despite rising benchmark rates, the increase in COFIX-linked jeonse loans contributed to this decline.
The overall household loan interest rate rose by 0.03 percentage points to 4.46%. This increase was influenced by rising mortgage rates and a slight increase in guarantee loans (4.10% to 4.11%), along with a growing share of relatively higher-rate general credit loans.
The share of fixed-rate mortgages fell from 47.8% in April to 41.6%, a decrease of 6.2 percentage points. This marks the lowest level since June 2021 (39.5%) and the seventh consecutive month of decline since November of last year (90.2%).
The share of fixed-rate loans among household loans also decreased from 27.8% to 24.6%, the lowest level in nearly four years since July 2022 (21.4%).
Lee noted, "The fixed rate is based on the five-year bank bond rate, which has risen significantly recently, suggesting a potential further decline in the share of fixed rates. Additionally, the volume of government-backed loans, which make up a large portion of fixed-rate loans, continues to decrease, indicating that the share of fixed rates is unlikely to increase significantly in the future."
In May, corporate loan rates fell by 0.01 percentage points to 4.13%. While the loan rate for large corporations rose by 0.01 percentage points to 4.10% due to rising short-term market rates, the loan rate for small and medium-sized enterprises decreased by 0.03 percentage points to 4.15% due to preferential interest rate support for expanding corporate credit and large-scale low-interest loans from some banks.
Overall, the average loan rate across all banks for households and corporations was 4.19%, down 0.01 percentage points.
The interest rate for savings deposits (based on new transactions) rose by 0.1 percentage points to 2.93%. The rates for pure savings deposits, such as time deposits (2.88%), and market-based financial products, including financial bonds and repurchase agreements (3.13%), increased by 0.01 percentage points and 0.06 percentage points, respectively.
The interest rate spread between loan rates and savings deposit rates, calculated based on new transactions, decreased by 0.12 percentage points to 1.26%. However, the spread based on outstanding balances remained unchanged at 2.28%.
* This article has been translated by AI.
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