Loan Rates: 2-Month Trend & 6-Month Projection
- February 2025 data reveals a continued decrease in both loan and deposit rates,reflecting broader economic trends.
- For the third consecutive month, market interest rates have fallen, leading to a corresponding decrease in bank loan and deposit rates.
- According to the Bank of Korea's (BOK) February 2025 weighted average interest rate statistics,deposit banks' household loan interest rates averaged 4.52% in February, a decrease of 0.13 percentage...
Bank Loan and Deposit Rates Decline Amid Market Interest Rate Drop
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February 2025 data reveals a continued decrease in both loan and deposit rates,reflecting broader economic trends.
For the third consecutive month, market interest rates have fallen, leading to a corresponding decrease in bank loan and deposit rates. The gap between new loan rates and deposit rates has widened for six consecutive months, indicating a faster decline in deposit rates compared to loan rates.
According to the Bank of Korea’s (BOK) February 2025 weighted average interest rate statistics,deposit banks’ household loan interest rates averaged 4.52% in February, a decrease of 0.13 percentage points from the previous month’s 4.65%. This marks the third consecutive month of decline.
Specifically, mortgage loan rates fell 0.04 percentage points to 4.23% from 4.27%, while general credit loan rates decreased by 0.08 percentage points, from 5.58% to 5.50%.
As indicators such as bank bond yields and COFIX have fallen, household loans have lowered 0.13%p, especially on chartered loans (-0.07%p) and general credit loans (-0.08%p).Bank of Korea Financial Statistics Team
Corporate loan interest rates also saw a decrease, falling 0.07 percentage points to 4.43%, marking a three-month low. Interest rates for large companies fell 0.07 percentage points to 4.41%, while those for small and medium-sized enterprises (SMEs) fell 0.08 percentage points to 4.45%.
The total bank loan rate, encompassing both household and corporate loans, decreased by 0.07 percentage points, from 4.53% to 4.46%.
Deposit Rates Also on the Decline
deposit banks’ savings (deposit) interest rates, based on new deposits, also experienced a decline, falling 0.10 percentage points from 3.07% to 2.97%.This marks the fifth consecutive month of decrease.
Pure reduction deposit rates, including regular deposits, fell 0.11 percentage points to 2.97%, while market-type financial products such as financial bonds and certificates of deposit (CDs) fell 0.07 percentage points.
The interest rate difference between new loan rates and deposit rates widened to 1.49 percentage points,an increase of 0.03 percentage points from the previous month’s 1.46 percentage points. This continues a six-month trend, indicating that deposit rates are falling faster than loan rates.
Interest rates on existing (not new) deposits also decreased, falling 0.04 percentage points from 2.28% to 2.24%.
Other Financial Institutions Follow Suit
Deposit rates at financial institutions other than banks also experienced declines. One-year deposit rates fell by the following amounts:
- Mutual savings banks: 0.20 percentage points to 3.10%
- Credit cooperatives: 0.02 percentage points to 3.36%
- Mutual finance institutions: 0.05 percentage points to 3.17%
- Saemaul Undong: 0.03 percentage points to 3.38%
Loan rates decreased at mutual savings banks (11.22%, a decrease of 0.66 percentage points) and mutual finance institutions (4.84%,a decrease of 0.05 percentage points),while they increased at Saemaul Undong (4.96%, an increase of 0.02 percentage points).
Bank Loan and Deposit Rates: What You Need to Know
Understanding the Declining Interest Rate Trends
What’s happening with bank loan rates?
Bank loan rates are generally decreasing. This trend is driven by falling market interest rates, which impacts the rates at which banks lend money.According to February 2025 data, there has been a decline in bank loan rates for the third consecutive month.
What types of loans are seeing rate decreases?
Various types of loans are experiencing reduced interest rates:
Mortgage loans: Fell by 0.04 percentage points to 4.23%.
General Credit Loans: Decreased by 0.08 percentage points to 5.50%.
Corporate Loans: Decreased by 0.07 percentage points to 4.43%.
How does the Bank of Korea data support these trends?
The Bank of Korea’s (BOK) February 2025 statistics show a clear indication of this trend.The data indicates declining household loan interest rates and corporate loan interest rates.
what factors are influencing loan rates?
loan rates are influenced by:
Market Interest Rates: Reflecting broader economic trends.
bank Bond Yields and COFIX: These indicators are falling.
Are loan rates different for different types of businesses?
Yes, corporate loan interest rates vary:
Large companies: Fell 0.07 percentage points to 4.41%
Small and Medium-sized Enterprises (SMEs): Fell 0.08 percentage points to 4.45%
What’s the overall impact on total bank loan rates?
The total bank loan rate, including both household and corporate loans, decreased by 0.07 percentage points to 4.46%.
Analyzing Deposit Rate Trends
What’s happening with deposit rates?
Deposit rates are also declining. February 2025 data shows that deposit banks’ savings interest rates have decreased for five consecutive months.
How do falling deposit rates impact savers?
Falling deposit rates mean that savers earn less interest on their deposits.
are all types of deposits experiencing rate declines?
Yes, the decline affects various types of deposits:
New Deposits: Fell 0.10 percentage points to 2.97%.
Pure reduction deposits: Fell 0.11 percentage points.
Market-type financial products: Interest rates on these products also fell.
* Existing deposits: Decreased by 0.04 percentage points.
What is the interest rate spread between loans and deposits?
The difference between new loan rates and deposit rates has widened to 1.49 percentage points, up from 1.46 percentage points the previous month. The continued widening over six months reflects deposit rates falling faster than loan rates.
Comparing Loan and Deposit Rate Changes
How can I compare the changes in loan and deposit rates?
The following table summarizes the rate changes in February 2025.
| Type of Rate | February 2025 Change (Percentage Points) |
| ————————- | —————————————- |
| household Loan Rates | -0.13 |
| Mortgage Loan Rates | -0.04 |
| General Credit Loan Rates | -0.08 |
| Corporate Loan Rates | -0.07 |
| Total Bank Loan Rate | -0.07 |
| New deposit Rates | -0.10 |
Other Financial Institutions and interest rates
Are other financial institutions showing similar trends?
Yes, other financial institutions have also seen declines in deposit rates.
Has the deposit rate changed at other institutions?
yes, deposit rates at financial institutions other than banks also experienced declines.
What is the trend in loan rates?
Loan rates decreased at mutual savings banks and mutual finance institutions.