# Ms. Park (38), an office worker, recently received a 4.2% interest rate hybrid (5-year fixed) mortgage loan from a commercial bank. The interest rate, which used to be in the low 3% range when looking for a house for sale in May, has jumped close to 1 percentage point in about six months. “Even at the beginning of the year, I thought how much the interest rate would rise if the interest rate went up, but I was mistaken,” he complained.
In recent years, the rate of increase in lending rates by commercial banks has accelerated. Last month, the average interest rate for loans to banks in the banking sector jumped the most in about five years, and there were cases where the fixed interest rates (mixed) of some banks exceeded 5% per year.
Unlike in the past, there is no justification for the government to control the increase in lending rates for banks. Rather, the government, which is trying to catch the increase in household loans, is in an atmosphere of welcoming an increase in interest rates in banks. Moreover, as the possibility of the Bank of Korea raising the base rate one after another is increasing, the interest burden on financial consumers is expected to increase further as interest rates rise.
Entering the 5% range for the first time in 4 years… Addition↑, preferential interest rate↓
According to the financial sector and the Bank of Korea on the 31st, the average interest rate for bank loans (based on the new transaction amount) in September rose 0.13 percentage points to 3.01% per annum, the largest increase since November 2016. As banks raised their lending thresholds under pressure from the financial authorities to regulate the total amount of household loans, the interest rates of some banks, including KB Kookmin and Woori, rose to a maximum of 5% per annum. It is the first time in four years since October 2017 that commercial banks’ main loan interest rates have exceeded 5%.
This is the result of banks raising lending rates one after another taking advantage of rising market interest rates such as COFIX and financial bonds, as well as reducing various preferential rates due to pressure from financial authorities to restrain the growth of loans.
In other words, banks are raising lending rates by either raising the additional interest rate that is added to the market interest rate, or by reducing the preferential rate that is lowered by reflecting transaction performance.
Loan interest rate hike spurred by the authorities “It will only rise more”
The problem is that the rate of increase in loan interest rates will inevitably accelerate in the future. The BOK has reiterated its intention to raise the base rate one more time at the Monetary Policy Committee scheduled for November 25 following last August. The market is also accepting the November base rate hike as a fixed fact, while it is predicted that the base rate will rise to a maximum of 1.75% by raising it two or three more times by next year.
Unlike in the past, when banks were criticized for raising interest rates on their own, as the government’s stricter loan regulations became stronger, there was no justification for controlling the rate hikes. At the end of 2017, when the main loan interest rate of some commercial banks exceeded the maximum annual rate of 5%, the financial authorities at the time warned, “Set the additional interest rate reasonably and refrain from excessive increase in the loan interest rate.” After that, banks quickly lowered the additional interest rate, and the interest rate rise was dampened, with the main loan interest rate falling to the highest 4% level again in a month.
An official in the banking sector said, “As the government’s stricter regulations on household loans, banks have no choice but to control loans by raising the interest rate threshold. looked forward
Jo Ah-reum reporter [email protected]
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