As the Bank of Korea raised the base rate again for the first time in three months, the era of ‘ultra-low interest rates’ in the 0% range came to an end. The narrow lending path is expected to have a significant impact on the real estate market. We cannot rule out the possibility that the housing purchase trend, which has weakened further, will subside further due to an interest rate hike. However, as the ‘low interest rate trend’ continues, experts predict that the impact on the market will not be significant unless there is a steep additional hike right now.
In the real estate industry on the 25th, when the base rate was raised, the main forecast was that the financing of home buyers would be more limited than before. As there is a possibility of a further increase in January next year, it is analyzed that the burden of repaying the loan principal and interest will increase, and demand for real estate investment will decrease slightly.
If you borrowed 200 million won at the Bank of Korea’s financial institution weighted average interest rate (3.010% main loan) as of September last year, the additional increase will increase your annual interest burden by about 500,000 won from 6 million won to 6.5 million won.
Ham Young-jin, head of Big Data Lab, said, “The increase in the benchmark interest rate, in conjunction with the policy to regulate the total amount of loans, could dampen real estate buying sentiment. It’s possible,” he said.
However, most experts predict that it is not very likely that the base rate hike will lead to a fall in house prices. The low interest rate trend of 1% is still maintained. In addition, even if the interest rate hike acts as a downward pressure on housing demand, the upward pressure on house prices will continue as long as the supply shortage continues.
Park Hap-soo, senior real estate expert at KB Kookmin Bank, said, “The base rate has already been raised by 0.25 percentage points once in August, and the loan interest rate has also increased by 0.5 to 1 percentage points. will be limited,” he said. Lim Chae-woo, senior real estate expert at KB Kookmin Bank, said, “The biggest factors that move the housing market are supply and demand. explained.
Jihae Yoon, senior researcher at Real Estate R114, said, “The 1% base interest rate is still a ‘low interest rate’, so tax burdens such as acquisition tax have a greater impact on purchase decisions. see,” he explained.
Seo Jin-hyeong, a professor of business administration at Kyungin Women’s University, president of the Korean Real Estate Association, said, “In 2019, the base rate was 1.75%, which was higher than the current one, but even then, the key to purchasing a house was the loan limit rather than the interest rate. Therefore, even if interest rates rise, it is within the range that individuals can afford.”
Lee Seung-yeop reporter [email protected]
Choi Da-won reporter [email protected]
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