The recent upward movement of the lending rate has come to a halt. Market participants took a breather, as any additional rise could impose a heavier burden on households, with total household debt having surpassed the 1 quadrillion won (US$935 billion) mark.
According to a Bank of Korea report published on March 27, local deposit banks’ average lending rate for loans taken out in February was 4.45 percent per year, 0.08 percentage points down from the previous month. The rate had hit the 4.46 percent mark in October last year and continued to rise since then. In the meantime, the rate of newly-issued mortgage loans provided by the banking sector was 3.71 percent, 0.04 percentage points lower than the previous month’s figure. This current value is the lowest ever since the first compilation of statistical data back in 2001.
The credit lending rate and those of savings-based loans and collective loans showed a downward movement, too. The first fell 0.22 percentage points to 5.63 percent, while the second declined by 0.07 percentage points to 4.21 percent. The overall household lending rate, including these rates, fell 0.1 percentage points month-on-month to 4.05 percent. This percentage is a record low as well, since 1996.
Still, the decrease in the lending rate on the part of non-banking financial institutions, except for mutual funds, was rather limited. As of the end of January this year, the total household loan balance declined, but the household lending by non-banking depository institutions continued rising for 11 months in a row.