The interest rate on household mortgage loans has fallen for three consecutive months, dropping to the 3% range for the first time in seven months. The interest rate on household loans has been on a downward trend for five months. This is due to the decrease in benchmark interest rates, which has led to lower indicator rates such as bank bonds and the cost of funds index (CoFIX).

According to the "average interest rate of financial institutions for April" released by the Bank of Korea on the 27th, the new loan interest rate of deposit banks based on new transactions recorded 4.19%, a decrease of 0.17 percentage points (p) compared to the previous month. This marks a four-month consecutive decline since December last year (4.64%).

The photo shows a bank loan counter. /Courtesy of News1

The interest rate on household loans was recorded at 4.36%, down 0.15 percentage points (p). This is the fifth consecutive month of decline since December last year (4.72%·-0.07%p).

The household loans that make up the interest rate include household mortgage loans, Jeonse loans, and general credit loans, all of which decreased. The rate on household mortgage loans fell to 3.98%, a decrease of 0.19 percentage points (p), marking a drop to the 3% range for the first time in seven months since September last year (3.74%). This has been a three-month consecutive decline since February (−0.04%p·4.23%).

The interest rate on Jeonse loans decreased by 0.18 percentage points (p) to 3.81%, continuing a downward trend for the fifth month since December last year (4.34%). General credit loans have also decreased for the fifth consecutive month, now at 5.28%, down from December last year (6.15%).

The interest rate on corporate loans recorded a decrease of 0.18 percentage points (p), falling to 4.14%. This marks a five-month consecutive decline. Both large corporations (4.32%→4.04%) and small and medium-sized enterprises (4.31%→4.24%) saw decreases.

The continuous drop in interest rates for household and corporate loans was significantly influenced by the decline in benchmark rates. Last month, the CoFIX fell to 2.70%, a decrease of 0.14 percentage points (p), while the certificate of deposit (CD) rate (91 days) dropped to 2.74%, down 0.10 percentage points (p). The bank bonds with a five-year term decreased to 2.80%, down 0.17 percentage points (p).

The interest rate on savings deposits at deposit banks last month was 2.71%, down 0.13 percentage points (p), marking a decline for seven consecutive months since October last year (3.37%). The interest rates on pure savings deposits such as time deposits (2.71%) and market financial products like CDs (2.69%) fell by 0.12 percentage points (p) and 0.20 percentage points (p), respectively. The interest rate spread (lending rate - deposit rate) decreased to 2.21 percentage points (p), down 0.04 percentage points (p) from the previous month.

Among non-bank financial institutions, the interest rates for savings have dropped at the credit cooperatives (-0.08 percentage points) and the Saemaul Geumgo (-0.09 percentage points). All lending rates decreased except for the Saemaul Geumgo, which increased by +0.14 percentage points.

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