Bank loan

Bank lending rate to households hits 8-year high in March

SEOUL, April 29 (Yonhap) — Bank interest rates on loans to households hit their highest level in nearly eight years in March amid tighter lending restrictions and monetary tightening from the central bank, data revealed on Friday.

Banks’ lending rate to households averaged 3.98 percent a year in March, up 0.05 percentage points from the previous month, data from the Bank of Korea (BOK) showed. .

This is the highest rate since the rate hit 4.02% in May 2014.

Bank lending rates have been on an upward trend in line with recent moves by the BOK to raise borrowing costs to contain growing inflationary pressure and rising household debt.

Earlier this month, the central bank raised its benchmark rate by a quarter of a percentage point to 1.5%, the fourth rate hike since August last year. He hinted at further hikes in the near future.

Of total household loans, unsecured loans saw the interest rate increase by 0.13 percentage points month-on-month to 5.46% in March, the highest since July 2014, when it s was 5.59%.

The home secured loan rate fell to 3.84% in March from 3.88% the previous month.

Rising borrowing costs have raised concerns that they will increase the burden on households who have taken out loans to fend for themselves during the pandemic and bought homes amid soaring house prices.