'Interest Burden Increases'... Household Loan Rates Hit Highest Level in 2 Years and 9 Months

[Financial News] Bank loan interest rates have once again drawn a steep upward curve in August. After taking a brief breather last July, loan rates have risen across the board—including household loans such as mortgages as well as corporate loans—due to the impact of rising market interest rates, significantly increasing the interest burden.
According to the weighted average interest rate data for financial institutions in August 2026 released by the Bank of Korea (BOK) on the 30th, the lending rate based on new loans at deposit banks in August was 4.40% per annum, up 0.13%p from the previous month (4.27%).
On the other hand, the deposit rate (savings deposit rate) remained unchanged from the previous month at 3.21% per annum. Based on outstanding balances, the total deposit rate rose by 0.05%p to 2.20% per annum, and the total loan rate increased by 0.03%p to 4.40% per annum.
Household and corporate loan interest rates rose in tandem.
The interest rate on household loans rose by 0.12 percentage points from the previous month (4.64%) to 4.76%. This is the highest rate since November 2024 (4.79%).
In particular, mortgage interest rates rose from 4.48% to 4.66%. This is the highest level since November 2022 (4.74%). Among mortgages, fixed rates stood at 4.88%, marking an 11-month consecutive rise since October last year (3.97%).
General credit loan interest rates also rose from 5.97% to 6.33%, making the interest burden on borrowers heavier.
Kim Seong-jun, head of the Bank of Korea (BOK)'s Financial Statistics Team, said, "Market interest rates have been rising continuously since the second half of last year, and rates have increased by 20 basis points (0.2%p) as of September," adding, "Given the upward trend in market interest rates, it is highly likely that lending rates will rise in September as well."
Corporate loan interest rates also rose by 0.10 percentage points from the previous month to 4.30%, influenced by the increase in short-term market rates (91-day CDs, short-term bank bonds, etc.). Loan rates increased for both large corporations (4.18% → 4.21%) and small and medium-sized enterprises (4.22% → 4.38%).
Among mortgage loans, the proportion of borrowers choosing fixed-rate products rose again for the first time in 10 months as interest burdens increased. The share of fixed-rate mortgages recorded 35.3%, up 3.4 percentage points from the previous month.
Due to reduced demand for variable interest rates, the proportion of fixed-rate loans in total household loans also rose by 2.5 percentage points from 21.0% to 23.5%. This marks a turnaround for the first time in 13 months since August last year.
Deposit interest rates remained stagnant.
The interest rate on savings deposits at banks remained at 3.21%, the same as the previous month.
The interest rate on pure savings deposits, centered on time deposits, fell slightly by 0.02%p from 3.16% to 3.14% due to factors such as low-interest funds flowing into some banks. However, as interest rates on financial products issued by banks to raise funds (such as certificates of deposit +0.18%p and repurchase agreements +0.03%p) rose (3.48% → 3.53%), it prevented the overall deposit interest rate from falling.
In the case of non-bank financial institutions (second-tier financial sector) other than general banks, both deposit and loan interest rates have risen at most institutions, with the exception of savings banks.
Deposit interest rates (based on a 1-year maturity) fell at savings banks (-0.33%p), while they rose at credit unions (+0.06%p), mutual finance institutions (+0.14%p), and MG Community Credit Cooperatives (+0.09%p).
Loan interest rates also showed a downward trend for savings banks (-0.28%p), while credit unions (+0.12%p), mutual finance institutions (+0.32%p), and MG Community Credit Cooperatives (+0.02%p) all rose.

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