Apartment loan rates at major South Korean savings banks have risen by as much as 1.48 percentage points from the end of last year.
Korea Investment Savings Bank's fixed rate on interim payment loans for apartments rose to an annual 6.00% to 6.50% in September from 4.52% to 6.00% in December last year, according to financial industry sources on the 20th. The floor rate climbed 1.48 percentage points and the ceiling rate rose 0.50 percentage point. The average rate on installment repayments under the bank's "Korea Investment ACE Household Apartment-Backed Loan" also rose to 6.17% from 4.90% over the same period, up 1.27 percentage points. For a 300 million won ($208,000) loan repaid in equal monthly installments of principal and interest over 30 years, the monthly payment would increase to about 1.83 million won from 1.59 million won.
OK Savings Bank and SBI Savings Bank each raised both the upper and lower ends of their fixed rates on apartment-backed loans by 0.37 percentage point from the end of last year. Daishin Savings Bank lifted its variable rate by 0.50 percentage point.
Industry officials attribute the increases to higher funding costs driven by rising market rates. With talk of a possible additional rate increase by the Bank of Korea, some expect the interest burden on new borrowers to grow. "Higher funding costs have fed through to lending rates," an official at one savings bank said, warning that "if rates keep climbing, the repayment burden on borrowers could widen further."