Bank deposit interest rates drop to 3%… The loan interest rate is in the range of 4-5%.

A loan window at a commercial bank in Seoul.ⓒ News1 Reporter Kim Myeong-seop

(Seoul = News 1) Reporter Park Hyun-young = Since the Bank of Korea lowered the base interest rate, the discrepancy between bank deposit interest rates and loan interest rates has continued.

While banks lowered deposit and savings interest rates to reflect the interest rate cut, loan interest rates actually increased due to pressure from the authorities to manage household loans.

As a result, only deposit interest rates are expected to fall for the time being, leading to an increase in banking sector deposit and loan margins (loan interest rates – deposit interest rates).

According to the Korea Federation of Banks on the 3rd, as of the 2nd, the highest interest rate for major term deposit products of the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) is around 3.35 to 3.55% per year. Compared to the 12th of last month (3.15-3.8%), the day after the Bank of Korea’s base interest rate cut, the lower end was lowered by 0.2 percentage points (p) and the upper end was lowered by 0.25 percentage points in three weeks.

Among the five major banks, NH Nonghyup Bank and Woori Bank were the first to drastically lower their deposit interest rates. On the 23rd of last month, Nonghyup Bank lowered the interest rates for five types of deferred deposits by 0.25 to 0.4 percentage points and the interest rates for 11 types of savings deposits by 0.25 to 0.55 percentage points. Woori Bank also lowered the Woori First term deposit interest rate by 0.2% point on the same day.

Toss Bank, an internet-only bank, lowered the Toss Bank account interest rate for deposits and withdrawals by 0.3% on the 1st. From the 1st, SC First Bank also lowered the interest rate on deferred deposits by up to 0.3%p, the interest rate on accumulated deposits by up to 0.5%p, and the interest rate on deposit and withdrawal deposits by up to 0.8%p.

On the other hand, loan interest rates are on the rise.

According to the financial industry, the credit loan interest rates of the four major banks (KB Kookmin, Shinhan, Hana, and Woori) were calculated to be 4.16-5.86% per year as of the 1st. Compared to the 11th of last month when the Bank of Korea lowered the base interest rate (annual 3.88-5.88%), the lower end rose 0.28%p in three weeks.

The mixed (fixed) interest rate on home mortgage loans (based on 5-year bank bonds) of the four major banks is 4.090-5.754% per annum, up 0.100%p from the lower end three weeks ago (3.990-5.780% per annum).

Despite the base interest rate cut, lending interest rates actually rose due to the financial authorities’ demand for household loan management.

The authorities have warned that if the banking sector extends household loans beyond the annual target, they may be penalized in terms of the size of household loans next year. Accordingly, the banking sector has begun tightening household loans by raising additional interest rates since July.

In relation to this, Financial Services Commission Chairman Kim Byeong-hwan said at a press conference on the 30th of last month, “New loans are not being reflected as much as lowering the base interest rate due to the burden on banks for household debt management.”

He continued, “If the Bank of Korea is moving towards lowering the base interest rate, this will gradually be reflected in the new loan interest rate over time.”

hyun1@news1.kr