South Korea's household lending rate hits 44-month high

Published: June 27, 2018 13:34:35 | Updated: June 30, 2018 13:21:52

File Photo (Collected)

South Korea's households bank lending rate hit a 44-month high in the previous month on rising expectations for the policy rate hike in the near future, Bank of Korea (BOK) data showed Wednesday.

According to the central bank data, the rates for new bank loans averaged an annualised rate of 3.68 per cent in the last month, up 0.03 percentage points from the previous month.

The lending rate gained 0.06 percentage points from a month earlier to 3.75 per cent in May, the highest since September 2014, reports Xinhua.

The higher lending rate came as the central bank raised its benchmark rate by 25 basis points in November last year to 1.5 per cent. It was the first rate increase in almost six and a half years.

Pressures increased on the lender to lift its policy rate further as the US Federal Reserve increased its target rate to a range of 1.75-2.00 per cent in June.

Higher lending rates are expected to increase debt-servicing burden for households, which rushed to purchase new home with borrowed money amid the record-low benchmark rate.

Rates for bank mortgage loans stood at 3.49 per cent, with those for credit loans coming to 4.56 per cent.

Lending rates for companies averaged an annualized rate of 3.66 per cent in May, up 0.02 percentage points from the previous month.

Rates for loans to big companies were unchanged at 3.31 per cent, but those for lending to small firms gained 0.03 percentage points to 3.88 per cent.