![\"(Yonhap)\"\/](\"https:\/\/www.europesays.com\/korea\/wp-content\/uploads\/2026\/05\/news-p.v1.20260518.0495d91504904c05b694224edf52a532_P1.png\")
\uc0ac\uc9c4 \ud655\ub300 (Yonhap) <\/p>\n \uc0ac\uc9c4 \ud655\ub300 (Yonhap) <\/p>\n
The South Korean bond market is under upward pressure as U.S. Treasury yields soar, fueling concerns over a sharp rise in household interest burdens.<\/p>\n
According to financial market data on Sunday, the yield on the 3-year U.S. Treasury note rose to 4.138 percent on Friday, local time, the highest level since February 24, 2025, when it reached 4.173 percent.<\/p>\n
Bond yields across major economies also surged as persistent inflation pressures and renewed concerns over fiscal soundness in debt-laden economies triggered a broad bond selloff.<\/p>\n
Alongside the surge in bond yields, expectations grew that the U.S. Federal Reserve could raise interest rates further. According to CME FedWatch data on Saturday, the probability of a U.S. rate hike in December reached 50 percent.<\/p>\n
The aftershocks also intensified in Korea\u2019s financial markets. Expectations that the Bank of Korea could return to a tightening cycle pushed Korean government bond yields sharply higher.<\/p>\n
On Friday, the yield on Korea\u2019s 3-year Treasury bond closed at 3.766 percent, the highest since November 14, 2023, while the 10-year Treasury bond yield rose to 4.217 percent, the highest since November 1, 2023.<\/p>\n
Rising market rates and the possibility of a benchmark rate hike this year fueled concerns over repayment burdens for household borrowers.<\/p>\n
According to data submitted by the Bank of Korea to Representative Park Sung-hoon of the People Power Party, a 0.25 percentage-point increase in lending rates would raise household interest burdens by 3.2 trillion won ($2.13 billion). Outstanding household loans stood at a record 1,852.7 trillion won at the end of last year.<\/p>\n
Market participants warn that continued increases in rates would further strain highly leveraged borrowers. Korea has a relatively high share of variable-rate mortgage loans, leaving households more exposed to rising market rates.<\/p>\n
The cost of funds index (COFIX), a benchmark for variable-rate mortgages, also continued to rise.<\/p>\n
According to the Korea Federation of Banks, the April COFIX for newly issued loans rose to 2.89 percent from 2.81 percent a month earlier. The yield on 5-year bank bonds rose from 3.809 percent on April 15 to 4.279 percent on Friday, up 0.47 percentage point in a month. Higher bank bond yields typically lead to higher rates on mortgages and other household loans.<\/p>\n
Meanwhile, the sharp rise in U.S. bond yields also rattled oil prices and stock markets. As of Friday, Brent crude futures rose 3.4 percent to $109 per barrel, while West Texas Intermediate crude climbed 4.2 percent to $105. U.S. equities, which had remained resilient on optimism over artificial intelligence investment despite uncertainty surrounding the Iran war, also weakened.<\/p>\n
By Kim Hye-ran, Kim Jeong-beom, Lim Sung-hyun and Chang Iou-chung
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