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Banks' household lending rates hit almost 9-yr high in June

All News 12:00 July 29, 2022

SEOUL, July 29 (Yonhap) -- Banks' average lending rates for fresh household loans in South Korea rose to the highest level in nearly nine years in June in line with the central bank's rate hikes to combat fast-rising inflation, data showed Friday.

The average rates of household loans extended by banks stood at 4.23 percent per annum in June, up 0.09 percentage point from a month earlier, according to the data from the Bank of Korea (BOK).

The June figure marked the highest level since September 2013, when it came to 4.26 percent.

Mortgage rates in June rose 0.14 percentage point on-month to 4.04 percent, the highest since 4.06 percent in February 2013, the data showed.

Unsecured loan rates jumped by 0.22 percentage point to 6 percent, the highest since 6.13 percent in August 2013.

The BOK said the rise in policy interest rates pushed up the lending rates.

The increase is in line with the BOK's recent moves to raise its policy rate to keep a lid on rising inflation pressure.

The BOK has hiked its key policy rate six times since August last year, including a sharp 0.5 percentage-point rise this month to 2.25 percent.

Borrowers took out more fixed-rate plans in June on expectations of further key rate hikes down the road, the BOK said.

Fixed-rate plans took up 18.4 percent of the total household loans extended in June, up 1 percentage point from a month ago.

During the same month, corporate loan rates increased 0.24 percentage point to 3.84 percent in June. Loan rates for large companies and SMEs advanced 0.24 percentage point and 0.27 percentage point, respectively.

Rates on bank deposits rose 0.39 percentage point to 2.41 percent last month, the highest since July 2014.

jwc@yna.co.kr
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