"What should we do about our loans?" Mortgage rates hit 4.66% in August, rising to their highest level in three years and nine months

[Financial News]  Bank mortgage loan rates rose for the fourth consecutive month in August, surging to their highest level in three years and nine months.
According to the Bank of Korea's (BOK) "August Weighted Average Interest Rates at Financial Institutions" report released on the 30th, the interest rate on newly issued household loans was 4.76%, up 0.12 percentage points from the previous month's 4.64%.
Mortgage loan rates also rose 0.18 percentage points from the previous month's 4.48% to 4.66%. They have increased for four consecutive months, reaching their highest level in three years and nine months since November 2022, when the rate stood at 4.74%.
The fixed-rate mortgage rate rose 0.12 percentage points to 4.88%, while the variable-rate mortgage rate climbed 0.18 percentage points to 4.53%. Both have been on an upward trend for 11 months since October last year, when the rate was 3.97%. Despite the growing interest burden, the share of fixed-rate mortgage loans rose 3.4 percentage points from the previous month's 31.9% to 35.3%, turning higher for the first time in 10 months since November last year, when it was 90.2%.
Kim Seong-jun, chief of the BOK's Financial Statistics Team, explained, "In the past, too, the share of fixed-rate loans tended to increase when the gap between fixed and variable rates narrowed. This time, the gap appears to have narrowed somewhat because variable rates rose relatively more."
The guaranteed loan rate rose 0.02 percentage points from the previous month's 4.26% to 4.28%. Within this category, jeonse loan rates increased 0.16 percentage points to 4.35%, while the general credit loan rate and corporate loan rate also rose by 0.36 and 0.10 percentage points, respectively, to 6.33% and 4.30%.
The overall lending rate at deposit banks was 4.40%, up 0.13 percentage points from the previous month's 4.27%. The interest rate on savings deposits remained unchanged at 3.21%. The rate on market-based financial products rose 0.05 percentage points to 3.53%, while the rate on pure savings deposits fell 0.02 percentage points to 3.14%.
The loan-deposit rate spread, based on newly issued loans last month, rose 0.13 percentage points to 1.19%. This marked the first increase in the spread in seven months since February, when it stood at 1.43%.
Meanwhile, both lending and deposit rates at non-bank financial institutions rose, except at mutual savings banks. Mutual savings banks recorded a lending rate of 10.23%, down 0.28 percentage points, and a deposit rate of 3.88%, down 0.33 percentage points.
[email protected] Kim Hee-seon Reporter