According to the financial sector on the 13th, the variable interest rate (new cofix) of the five major banks, including KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank and Nonghyup Bank, was 4.08 to 6.92% per year as of the 9th. The lower end rose to the 4% level and the upper end approached the 7% level. For some banking products, the upper end of the interest rate has already exceeded 7%.
The Bank of Korea has kept its benchmark interest rate unchanged at 3.50% since February. Nevertheless, market interest rates are under increasing pressure. This is because as the US Treasury yield fluctuates, the bank bond yield linked to domestic lending rates is also under upward pressure.
However, despite the high interest rate environment, the demand for loans has increased, and the size of mortgage loans has increased significantly. This makes it difficult to enforce interest rate cuts. In the case of Seoul, the apartment transaction volume has been increasing for eight months in a row. According to the Seoul Real Estate Information Plaza, apartment sales in Seoul hit a low of 559 in October last year and continue to increase until June (3853) when the count was completed.
When interest rates rise, households’ interest burden rises. The Bank of Korea also analyzed that for every 0.25%P (point) and 0.5 %P increase in the base interest rate, the annual interest burden per household would rise by 161,000 won and 322,000 won, respectively.
Meanwhile, the balance of household loans continues to rise. According to the Bank of Korea, as of July, the balance of household loans in the bank sector reached 1068.1 trillion won, an increase of 6 trillion won from a month ago, and a record high. In particular, the cost of debt increased by 6 trillion won from the previous month to 820.8 trillion won. The stock balance has been on the rise for 5 months in a row.
However, as the trend in the housing market is bottoming out, young people who have already purchased a house have no choice but to continue to endure the burden of interest rate hikes. “There are many opinions in the US that interest rates will be cut in the first half or second half of next year at the earliest,” said Du Seong-gyu, CEO of Mokmin Economic Policy Research Institute. There is trauma from the experience, but as there is currently no sharp alternative, we will have to endure it for now.”
However, he added, “It is judged that the domestic real estate market has gone out of the bottom, with apartment prices across the countr안전놀이터y also showing an upward trend.”
On the other hand, there are opinions that a conservative approach is needed until the direction of interest rates is decided. Koh Jong-wan, director of the Korea Institute of Wealth Management, said, “The upper limit of the interest rate for the deposit is in the 5% range, but the current top 7% is rather high. “It would be better to wait and see until this year, when the direction of interest rate rise is uncertain due to many variables such as household debt,” he said.