{"id":88946,"date":"2026-07-16T22:25:12","date_gmt":"2026-07-16T22:25:12","guid":{"rendered":"https:\/\/www.europesays.com\/korea\/88946\/"},"modified":"2026-07-16T22:25:12","modified_gmt":"2026-07-16T22:25:12","slug":"korean-banks-raise-mortgage-rates-as-central-bank-lifts-key-rate","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/korea\/88946\/","title":{"rendered":"Korean Banks Raise Mortgage Rates as Central Bank Lifts Key Rate"},"content":{"rendered":"

\"AA loan notice posted at a bank in Seoul. Yonhap News<\/p>\n

Commercial banks raised their variable-rate mortgage rates immediately after the Bank of Korea (BOK) lifted its base rate, according to industry sources. As household interest burdens rise rapidly, the debt repayment burden on self-employed individuals and small and medium-sized enterprises is expected to grow further.<\/p>\n

According to the financial industry on the 17th, KB Kookmin Bank raised its variable-rate mortgage rate by 0.15 percentage points after the Bank of Korea increased its base rate on the 16th. Woori Bank also raised the upper limit of its variable-rate mortgage rate from the mid-5% range to the high-5% range. As of May this year, 75.4% of new household loans were variable-rate loans, meaning most borrowers cannot avoid the full impact of the rate hike, analysts said.<\/p>\n

Each 0.25 percentage point increase in mortgage rates is estimated to add 1.8 trillion won to borrowers’ interest burden. That amounts to 296,000 won in annual interest per person. For other loans, including credit loans, a 0.25 percentage point rate increase raises the interest burden by 1.5 trillion won.<\/p>\n

With market rates rising rapidly in the first half of this year, the interest repayment burden has grown. Fixed and mixed-rate mortgage rates at the five major banks stand at 4.77% to 7.49%. Compared with the end of last year (3.93% to 6.23% per year), the lower and upper limits rose 0.84 percentage points and 1.26 percentage points, respectively. At this pace, the upper limit of mortgage rates could exceed 8% within the year, observers said. Credit loan rates (top credit grade, six-month financial bonds) also rose to 4.19% to 5.78%, up 0.35 percentage points at the lower limit and 0.42 percentage points at the upper limit from the end of the previous year (3.84% to 5.36%).<\/p>\n

The industry expects delinquencies to rise sharply, centered on the self-employed and multiple-debt borrowers. According to the office of People Power Party lawmaker Park Sung-hoon, the total outstanding loan balance of self-employed individuals across all financial institutions stood at 1,095.5 trillion won as of the end of March. Delinquent loans reached 22.3 trillion won, up 2 trillion won from the end of last year to a record high. The delinquency rate also rose to 2.04%, surpassing 2% for the first time in 10 years and nine months.<\/p>\n

Financial institutions are also on alert over soundness management. Looking at delinquency rates by sector across the entire financial industry, including banks, the rate is rising steeply in sectors hit hard by weak domestic demand, such as construction (5.48%), real estate (3.01%), lodging and food services (2.85%), and wholesale and retail (2.52%).<\/p>\n

Supervisory authorities are also growing more concerned. Financial Supervisory Service (FSS) Governor Lee Chan-jin instructed officials to “closely examine the sector-specific risk factors that could arise from rate hikes, such as worsening corporate financing conditions and rising interest burdens on vulnerable borrowers.”<\/p>\n","protected":false},"excerpt":{"rendered":"A loan notice posted at a bank in Seoul. Yonhap News Commercial banks raised their variable-rate mortgage rates…\n","protected":false},"author":2,"featured_media":88947,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[456],"tags":[845,1833,846,20445,9128,46809,5177,46810,36694,626],"class_list":["post-88946","post","type-post","status-publish","format-standard","has-post-thumbnail","category-bank-of-korea","tag-bank-of-korea","tag-bank-of-korea-rate-hike","tag-bok","tag-delinquency-rate","tag-fss","tag-household-debt-korea","tag-kb-kookmin-bank","tag-self-employed-loans","tag-variable-rate-mortgage","tag-woori-bank"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/88946","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/comments?post=88946"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/88946\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media\/88947"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media?parent=88946"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/categories?post=88946"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/tags?post=88946"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}