Interest rates on bank loans, which reflect market interest rates due to interest rate cuts, are also falling.

The Bank of Korea has cut its base interest rate twice consecutively. This decision has led to a decline in lending rates across the banking sector.

Following the recent monetary policy committee meeting, the Bank of Korea reduced the key interest rate by 0.25 percentage points. As a result, interest rates for periodic home mortgage loans at major commercial banks have decreased.

Hana Bank’s minimum interest rate for five-year mortgage loans dropped from 3.586% to 3.492%. Shinhan Bank also lowered its rate from approximately 4.1% to 4%.

KB Kookmin Bank’s minimum interest rate for its five-year revolving mortgage loan currently stands at 4.03%. This is expected to decrease to the 3% range next week as weekly interest changes take effect.

Among internet banks, K Bank reduced its five-year apartment mortgage loan interest rate from 3.9% to 3.79%. Kakao Bank’s rate, previously above 4.1%, is now at 3.96%.

What are the potential risks of the Bank of Korea’s interest rate cuts for the economy?

Interview with Dr. Kim jae-Soo, Economist adn banking Specialist

News Directory 3: Dr.Kim, thank you for joining us today. The Bank of Korea has recently cut its base interest rate twice in a row. Can you explain the potential impact of this decision on the overall economy?

Dr. Kim: Thank you for having me. The Bank of Korea’s decision to cut the base interest rate by 0.25 percentage points is a strategic move aimed at stimulating economic growth.Lower interest rates tend to increase borrowing, which can lead to higher consumer spending and investment. This is particularly crucial in a challenging economic habitat.

News Directory 3: We’ve seen a decline in lending rates across the banking sector as a result.Can you provide some insight into how this affects consumers, particularly regarding mortgage loans?

Dr. Kim: Certainly. With the recent rate cuts, major commercial banks have reduced their mortgage rates significantly. For instance, Hana Bank’s five-year mortgage loan interest rate has dropped from 3.586% to 3.492%. Such reductions make home loans more affordable, encouraging potential homeowners to borrow and invest in property. This could also lead to increased activity in the real estate market, which is beneficial for economic growth.

News Directory 3: What about interest rates for personal business loans? Are we seeing a similar trend there?

Dr. Kim: Yes, we are witnessing a decrease in personal business loan rates as well. Such as, Toss Bank has lowered its rate from 4.94% to 4.78%. This reduction can provide small business owners with more accessible financing, potentially spurring entrepreneurship and business expansion.

News Directory 3: Despite these reductions in loan rates, it appears that deposit interest rates have remained stable. Why is that the case?

Dr.Kim: That’s a great question. While lending rates have decreased, many banks are maintaining their deposit interest rates, which currently sit at around 3.30%. This is likely because banks want to retain their deposits and ensure liquidity while managing their interest expenses. However, they might be forced to adjust this if lending activity increases and competition for deposits grows.

News Directory 3: Looking ahead, how do you see the banking sector reacting to these changes?

Dr. Kim: As market interest rates decline, it’s expected that loan interest rates will continue to follow suit. Banks are closely monitoring these developments and may adjust household loan sizes as early as next year. If economic conditions remain stable, we could see further opportunities for both consumers and businesses as interest rates continue to favor borrowing.

News Directory 3: Thank you, Dr. Kim, for your insights into the recent developments with the Bank of Korea’s interest rates.your expertise is greatly appreciated.

Dr. Kim: Thank you for having me. It’s an critically important time for us to track these changes in the banking sector, and I’m glad to share my thoughts.

Additionally, the interest rate for certificates of deposit fell from 3.44% to 3.29%. The five-year bank bond interest rate dropped from 3.292% to 3.001%.

Interest rates for personal business loans are also decreasing. Toss Bank’s minimum rate for personal business credit loans fell from 4.94% to 4.78%. K Bank’s rates for these loans fell by 0.05 percentage points, indicating potential for further reductions.

Despite the decrease in base interest rates, banks have yet to lower deposit interest rates. Current data shows that the one-year term deposit interest rate remains at 3.30%.

A banking official noted that as market interest rates decline, loan interest rates are also likely to follow. The official mentioned that banks may increase household loan sizes again early next year and are closely monitoring the situation.