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July 29, 2009
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| Interest rates charged on new fixed-rate mortgages are on the rise, thanks to comments by the head of the Bank of Korea. Kookmin Bank, the nation’s biggest lender, announced that it would charge 5.26 to 6.96 percent annual interest on new fixed-rate mortgages starting this week, an increase of 0.18 percentage point. Woori Bank said it would charge 6.86 to 7.18 percent interest, while Hana Bank is charging 5.96 to 7.16 percent. The lenders said rates are rising after a sharp spike in the yield rate of AAA-rated three-year bank bonds, to which mortgages are linked. The benchmark bank bond rate jumped to 5.13 percent June 12 from 4.68 percent at the end of May, after Bank of Korea Governor Lee Seong-tae said at a monthly monetary policy meeting on June 11, “If advanced countries change the keynote of their monetary policies, we cannot avoid being influenced by their move.” Market observers considered Lee’s remarks indicative of an eventual hike in Korea’s base rate, and so market interest figures surged. Earlier this month, the benchmark bank bond rate declined to between 4.5 and 5 percent, but it has risen above 5 percent again in recent days. Meanwhile, interest rates on variable-rate mortgages, which represent 90 percent of all such loans, have remained stable in past months, since the rate on certificates of deposit, the benchmark for short-term rates, has remained at about 2.4 percent since the middle of April. “Medium and long-term interest rates will continue to increase through the third quarter,” Shin Hwan-jong, an analyst at Woori Investment and Securities. “Market interest rates are boosted only by the central bank’s remarks about an economic recovery, even if the BOK does not actually increase the key rate.” By Kim Won-bae [symoon@joongang.co.kr] |
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