Rate hikes fail to cool Korea's housing expectations, mortgage demand
Two consecutive interest rate hikes by the Bank of Korea (BOK) have done little to cool expectations that home prices will keep rising, defying the usual pattern where higher borrowing costs weigh on the housing market, industry officials said Monday. The central bank raised its benchmark rate in July and August, each by a quarter percentage point, taking it to 3 percent. Yet its September consumer survey showed the housing price outlook index at 125, up from 120 in June, before the rate hikes began. A reading above 100 means more consumers expect home prices to rise than to fall. In Seoul, the sentiment was even higher at 133. The resilience is striking given that mortgage rates have climbed to nearly 8 percent. It also runs counter to the pattern seen over the past decade, where housing price expectations generally rose as interest rates fell and weakened when rates climbed. The latest rate increases were themselves aimed in part at cooling the housing market. BOK Gov. Shin Hyun-song said last month that the back-to-back hikes were “an unusual move intended to send a strong signal t
