The main loan interest rate is again 7% ‘front’… Due to the rise in bond interest rates
Banks “Including the Big Step, an additional 0.75~1.00%p increase in the base rate within the year… a possibility of 8% of the principal”
If the interest rate rises by 1.00%p, the borrower’s interest is 13.7 trillion ‘snowball’.
As interest rates on home mortgage loans at major commercial banks have increased significantly recently, the top end was approaching 7%.
As the US’s fourth consecutive massive move (a 0.75 percentage point increase in the base rate) in early November is strong and the Bank of Korea is likely to respond with a big move (a 0.50 percentage point increase) next month, the bond rate, which is one of the lending rate index rates because it is soaring.
In the banking sector, if monetary tightening between the US and Korea continues faster than expected, there are also comments that the loan interest rate could exceed 8% by the end of this year for the first time since the financial crisis.
It is feared that the interest burden of the young family and the self-employed, who have taken out many loans in recent years due to asset investment and financial difficulties, will increase rapidly.
◇ In two months, the interest rate on the main loan has risen up to 0.7%c
According to the financial industry on the 25th, the mixed (fixed) mortgage loan interest rate of KB Kookmin, Shinhan, Hana, and Woori Bank is 4.380 ~ 6.829% per annum on the 23rd.
Compared to July 16 (4.210-6.123%) about two months ago, the upper end jumped 0.706 percentage points (p) and the lower end jumped 0.170 percentage points.
This is because the interest rate on 5-year bank bonds (AAA, unsecured), which is mainly used as a hybrid type of mortgage interest rate indicator, rose 1.153 percentage points from 3.642% to 4.795% during the same period.
Interest rates in the bond market, including bank bonds, are rising rapidly due to the possibility of tightening faster than expected in the United States and Korea.
The interest rate for hybrid mortgage-type loans was above 7% in mid-June at some banks, and then fell to the low 6% range due to the stabilization of bond interest rates and efforts by banks to reduce the interest loan-to-deposit rate gap
The variable interest rate for mortgage loans (linked to new Cofix) is currently 4.200 to 6.608% per annum.
Once again, the top end increased by 0.390 percentage points compared to two months ago (4.100 to 6.218 percent).
This is because the COfix, the index rate for floating rates, has risen by 0.580 percentage points.
For credit loans, interest rates from 4.903 to 6.470% (grade 1, 1 year) are applied.
Compared to July 16 (4.308-6.230%), the lower end rose 0.595 percentage points and the upper end 0.240 percentage points.
[표] Commercial Bank Loan Rate Trend
┌───────┬─────────────────────────────
│ │July 16, 2022 │September 23, 2022 │Range variation on bottom and top │
│ │ │ │ │
…
│ Mortgage Loan │ 4.100 ~ 6.218% p.a. │ 4.200 ~ 6.608% p.a. │ +0.100%p, +0.390%p │
│Flow Rate (New │ │ │ │
│Based on Cofix) │ │ │ │
…
│ Mortgage Loan │ 4.210~6.123% p.a. │ 4.380~6.829% p.a. │+0.170%p, +0.706%p │
│ Fixed rate (bank │ │ │ │
│Based on 5 year bonds)│ │ │ │
│ │ │ │ │
…
│Jeonse Loan (Housing │Annual 4.010-6.208% │Annual 3.950-6.318%│-0.060%p, +0.110%p │
│Guarantee Finance Corporation.│ │ │ │
│ Maturity 2 years) │ │ │ │
…
│Credit Loan Interest Rate (│4.308~6.230% per annum │4.903~6.470% per annum│+0.595%p, +0.240%p │
│Level 1, 1 year) │ │ │ │
…
│ New Cofix │2.380% │2.960% │+0.580%p │
…
│ 5 Year Bank Bonds (A│3.642% │4.795% │+1.153%p │
│AA・No warranty) │ │ │ │
…
│ One-year bank bonds (A│3.626% │4.214% │+0.588%p │
│AA・No warranty) │ │ │ │
└───── see ┴─────────’s┴──────────── watch
※ KB, Shinhan, Hana, Woori Bank, and bond information center data collection
◇ “Including the Big Step, the base rate will rise 0.75~1.00% more within this year”
Furthermore, interest rates on loans are likely to rise further by the end of the year.
The banking sector and the market believe that the BOK’s Monetary Policy Committee (hereafter referred to as the Monetary Policy Committee) is unlikely to take a major step at the monetary policy direction decision meeting in October in response to’ r successive huge steps in the United States.
This is because, if only a baby step (an increase of 0.25 percentage points) is used, the base rate gap with the US will widen to 1.50 percentage points by the end of the year, increasing capital outflows and increasing pressure on exchange rates and import prices.
Lee Chang-yong, the governor of the BOK, also hinted at the possibility of a big step, saying, “The prerequisites for raising the base rate by 0.25 percentage points (p) have changed a lot.”
If you only take the big step in October and return to the baby step in November, the base rate will rise by 0.75 percentage points by the end of this year, and 1.00 percentage points more if you take the big step in October and November.
If the base rate rises rapidly, the market interest rate and the interest rate of the loan linked to it will inevitably fluctuate together, and even if the base rate raising only 0.75 to 1.00 percentage points, the loan interest rate is expected to approach 8% by the end of the year.
“More than anything else, the pace of tightening in the United States is much faster than we expected a few months ago,” said an official from the credit sector in commercial banks there,” he analyzed.
If the top interest rate on home mortgage loans at commercial banks reaches the 8% range, it will be the first time in 14 years since the 2008 financial crisis.
According to the internal mortgage loan interest rate statistics of one of the five major commercial banks (KB, Shinhan, Hana, Woori, and NH Nonghyup), in the case of the hybrid type (fixed interest rate), the interest rate was 8%. last recorded in December 2008.
Even on a variable rate basis, the interest rate has never been above 8% since October 2008.
◇ Even if the interest rate rises only 0.25%, interest rates like Youngkul are 3.4 trillion ↑… “The financial environment experienced by young borrowers for the first time”
If interest rates rise too quickly, the repayment burden on borrowers rises sharply, increasing the possibility of an economic downturn due to a contraction in consumption as well as the insolvency of the entire financial system.
According to Bank of Korea’s ‘Home Credit (Debt)’ statistics, at the end of June this year, a total of 1757.9 trillion household loans had been won.
In addition, according to the Bank of Korea’s Economic Statistical System (ECOS), the share of variable interest rates affected by the base rate adjustment among depository banks’ household loan balances in June was 78.1%, the highest in eight and three years. months since March 2014 (78.6%).
Assuming that the proportion of variable interest rates in non-bank financial institutions is the same, even if the Bank of Korea’s base rate increases by 0.25 percentage points and the loan interest rate rises by that much, the interest burden of household borrowers will is 3.4 trillion. gain (US$ 1757.9 trillion) arithmetically ×78.1%×0.25%) increase.
Given the expected rate of increase in the base rate within this year (0.75 to 1.00% p), by the end of this year, the additional interest amount will be 10.29 trillion won (3.43 trillion won × 3 ) to 13.729 trillion won (3). It means it can increase 432.3 billion won × 4).
An official from a commercial bank said, “The loan interest rate of 7-8% is unfamiliar to bank employees, especially for young borrowers who are used to the low interest rate environment.
/happy news
