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Banks' lending rates dip to 20-month low in June

Finance 12:00 July 31, 2019

SEOUL, July 31 (Yonhap) -- Lending rates on bank loans continued to trend lower last month, falling to a 20-month low, in apparent anticipation of a rate cut by the Bank of Korea that came the following month, central bank data showed Wednesday.

The average interest rate on loans extended by banks came to 3.49 percent in June, down 0.13 percentage point from a month before, according to the Bank of Korea (BOK).

The reading marks the lowest since October 2017, when the average rate stood at 3.46 percent.

Banks' lending rates dip to 20-month low in June - 1

The average lending rate has been on a steady decline since February, three months after the BOK raised its policy rate by 25 basis points to 1.75 percent.

The central bank slashed the key rate back to 1.50 percent in the latest rate-setting policy board meeting on July 18.

The drop in the average lending rate also comes amid continued government efforts to curb the rise in household debts.

In June, the average lending rate for businesses came to 3.58 percent, down 0.09 percentage point from the previous month, while that of households dropped 0.24 percentage point to 3.25 percent over the cited period.

The average rate on all outstanding loans came to 3.68 percent as of end-June, down 0.03 percentage point from a month earlier, according to BOK.

The gap between the interest rates paid and charged by banks narrowed to 2.75 percent in June as the average rate paid fresh savings dropped 0.07 percentage point to 1.79 percent.

bdk@yna.co.kr
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