Mortgage rates have reached their highest level in three years and nine months, increasing the burden on homebuyers.
According to the Bank of Korea on September 30, the average mortgage rate for new loans at deposit banks in August was 4.66%, up 0.18 percentage points from the previous month. This marks the highest level in nearly four years.
The average mortgage rate for loans with a term of 10 years or more, offered by the five major banks—KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup—rose to 4.94%, an increase of 0.28 percentage points from the previous month.
As mortgage rates climb, consumers relying on loans to purchase homes are facing higher interest burdens. Given the large loan amounts and extended repayment periods, even small increases in rates can significantly impact monthly payments. This is particularly challenging for first-time homebuyers who are already dependent on loans in a high housing price environment, as they must now consider both property prices and financial costs.
In response to the tightening of household loan management, banks are adjusting loan limits and preferential interest rate conditions, making it difficult for borrowers to secure lower effective rates. As of September 28, the outstanding balance of mortgages at the five major banks stood at 620.87 trillion won, an increase of 9.27 trillion won (1.5%) from the end of last year.
In the banking sector, there is also a growing competition for deposits, with banks raising deposit rates in line with recent market interest rate trends. Shinhan Bank announced it has increased its one-year term deposit rate to a maximum of 3.50%. Previously, KB Kookmin Bank and Woori Bank also raised their one-year term deposit rates to 3.5%.
* This article has been translated by AI.
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