Bank mortgage rates hit 9-yr high in Feb. amid central bank’s hikes

Rates on mortgage loans extended by South Korean banks rose to the highest level in about nine years in February in line with interest rate hikes by the central bank, data showed Thursday.

Banks’ mortgage loan rate stood at 3.88 percent per year on average in February, up 0.03 percentage point from a month earlier, according to the data from the Bank of Korea (BOK).

This marked the highest since March 2013, when the home-back loan rate rose to as high as 3.97 percent.

Mortgage rates have been on the rise as the BOK has raised its key interest rate three times since August last year to the pre-pandemic level of 1.25 percent.

Those rate hikes were aimed at taming inflation and normalizing its long loose monetary policy, which has been in place to cushion the fallout from the pandemic.

The central bank has hinted at further rate increases in the months to come.

Banks’ unsecured loan rate also inched up 0.05 percentage point to 5.33 percent in February, the highest since August 2014, the data showed.

Rising borrowing costs have spawned worries that they could deepen the burden on households who have taken out loans to tide over the pandemic and bought houses amid soaring home prices. (Yonhap)