Annual interest 5.16%… Household credit loan interest rate highest in 7 years

Judamdae also rose 0.25%p to 3.51% in November

In November of this year, the interest rate on household general credit loans at deposit banks exceeded 5% per annum for the first time in seven years. Mortgage loan interest rates also reached the highest level in 7 years and 4 months, continuing an upward trend.

According to statistics on the ‘weighted average interest rate for financial institutions’ released by the Bank of Korea on the 30th, the interest rate on mortgage loans (weighted average, based on new handling amount) of deposit banks in November rose by 0.25 percentage point to 3.51% per year. This is the highest level in 7 years and 4 months since July 2014 (3.54%).

The household interest rate on general credit loans also jumped 0.54 percentage points from 4.62% to 5.16% per annum. It is the highest record since September 2014 (5.29%), and the rise (0.54 percentage points) was the largest in 9 years and two months since September 2012 (0.66 percentage points). It is the first time in 7 years and 1 month since October 2014 (5.08%) that the household credit loan interest rate has exceeded 5% per annum.

As a result, the overall household loan interest rate also rose 0.15 percentage point from October to 3.61 percent per annum. It is the highest since December 2018 (3.61%).

Song Jae-chang, head of the Bank of Korea’s financial statistics team, explained, “This is because index interest rates such as Cofix and bank bonds have risen, and banks have raised interest rates by raising additional interest rates to manage household loans.” He added, “In the case of general credit loan interest rates, by limiting the loan limit to within the annual income, the proportion of low- and medium-credit loans has increased compared to high-credit loans, and the handling of medium-interest loans has also been expanded.”

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