South Korean banks' lending rates for home-backed loans in July jumped to the highest level in three-and-a-half years while deposit rates soared to a six-year high, largely due to the central bank's key rate increase, the Bank of Korea (BOK) said Thursday.
The average interest rate for home-backed loans climbed 0.11 percentage point from a month earlier to 6.24 percent in July. That was the highest rate since January 2004 when the figure came to 6.29 percent, the BOK said.
Lenders' average interest rate on new deposits, which advanced for the ninth consecutive month, rose 0.1 percentage point to 4.97 percent in July, the highest rate since 5.18 percent in August 2001.
"Interest rates for household lending and new deposits rose largely because of the central bank's rate hike in July," said Kim Kyung-hak, an official at the BOK's economic statistics department.
On July 12, the central bank boosted the call rate by a quarter point to 4.75 percent, the first increase in 11 months. The call rate, the interest on overnight inter-bank loans, serves as the country's benchmark short-term interest rate.
In line with a hike in lending rates for home-backed loans, coupled with a 0.02 percentage point rise to 6.6 percent in credit loan rates, the average interest rate for household loans climbed 0.05 percentage point to 6.38 percent.
Meanwhile, the average interest rate for corporate loans dropped 0.01 percentage point to 6.41 percent, mainly because loan rates for small and medium businesses dipped 0.02 percentage point to 6.61 percent. But lending rates for large corporations jumped 0.05 percentage point to 5.92 percent.
The overall lending rates to both corporations and households declined for the second straight month to 6.41 percent in July, down 0.01 percentage point from the previous month, the BOK said.