After 13 years, the age of 7% of the main loan interest rate is coming

As it is predicted that the base rate will rise to at least 2.0% this year, there is a possibility that the upper end of the housing mortgage loan (main loan) interest rate of commercial banks will rise to the 7% range for the first time in 13 years.

According to the financial industry on the 17th, the variable interest rate (linked to the new Cofix) for the four major banks, KB Kookmin, Shinhan, Hana, and Woori Bank, which will be applied from the 18th, is 3.420 to 5.342% per year. Considering that it was 3.710~5.070% at the end of last year, the upper end rose by 0.272 percentage points in three months.



The effect is that the COFIX (financing cost index), which is the standard for the variable interest rate for the main loan, increased by 0.17 percentage points from 1.55% (based on the new COFIX) to 1.72% during the same period due to the increase in deposit (deposit) interest rates and market interest rates. went crazy As of March, the new cofix recorded 1.72%, up 0.02 percentage points from the previous month.



The interest rate for the main loan hybrid (fixed) type rose more from 3.600 to 4.978% per annum to 3.900 to 6.380% during the same period. This is the result of a 1.169 percentage point increase in the interest rate of 5-year bank bonds (AAA, unguaranteed), which is used as an indicator of fixed interest rates for main loans, from 2.259% to 3.428%. Bond market interest rates, including bank bonds, are rising rapidly, reflecting the recent prospect of accelerating US tightening and inflation expectations.



The interest rate on credit loans (grade 1, one year) is currently 3.532-5.180% per annum. Compared to the end of last year (3.500~4.720%), the lower end rose by 0.032 percentage points and the upper end by 0.460 percentage points, exceeding the 5% level.



Loan interest rates are expected to continue rising until the end of this year. This is because, if the Monetary Policy Committee of the Bank of Korea (Monetary Policy Committee) raises the base rate additionally within this year in response to inflation and monetary tightening in the US, it is highly likely that the market interest rate will rise accordingly. In fact, the MPC raised the base rate by 0.25 percentage points from 1.25% to 1.50% on the 14th, implying the possibility of an additional rate hike. At that time, the Monetary Policy Committee explained that “the recovery of growth will continue going forward and the inflation rate will be stabilized at the target level in the medium-term period, while monetary policy will be managed with attention to financial stability.”



If the base interest rate rises to 2.0% this year, there is a possibility that the interest rate on commercial banks’ main loans will reach the maximum of 7%. According to a commercial bank’s internal lending rate statistics, it exceeded 7% in September 2007, peaked at 8.4% in December 2008, and then fell back to the 7% range in 2009. This time, if the main dam level exceeds 7%, it will re-enter the 7% level for the first time in 13 years.



On the other hand, some analysts say that the loan interest rate will not rise as rapidly as expected. This is because banks are competing to lower the loan interest rate by adjusting the additional interest rate as the balance of household loans by banks has decreased in the past four months. In addition, the 7% loan interest rate range is the highest interest rate range that does not apply the preferential interest rate, so it is predicted that there will be virtually no cases of loans at this level.



An official from a commercial bank said, “Most customers receive a preferential interest rate when they receive a loan, so the actual interest rate experienced by borrowers will be lower than the highest interest rate.”