The Korea Times
amn_close.png
amn_bl.png
National
  • Politics
  • Foreign Affairs
  • Multicultural Community
  • Defense
  • Environment & Animals
  • Law & Crime
  • Society
  • Health & Science
amn_bl.png
Business
  • Tech
  • Bio
  • Companies
  • World Expo 2030
amn_bl.png
Finance
  • Companies
  • Economy
  • Markets
  • Cryptocurrency
amn_bl.png
Opinion
  • Editorial
  • Columns
  • Thoughts of the Times
  • Cartoon
  • Today in History
  • Blogs
  • Tribune Service
  • Blondie & Garfield
  • Letter to the Editor
amn_bl.png
Lifestyle
  • Travel & Food
  • Trends
  • People & Events
  • Books
  • Around Town
  • Fortune Telling
amn_bl.png
Entertainment & Arts
  • K-pop
  • Films
  • Shows & Dramas
  • Music
  • Theater & Others
amn_bl.png
Sports
  • Hangzhou Asian Games
amn_bl.png
World
  • SCMP
  • Asia
amn_bl.png
Video
  • Korean Storytellers
  • POPKORN
  • Culture
  • People
  • News
amn_bl.png
Photos
  • Photo News
  • Darkroom
amn_NK.png amn_DR.png amn_LK.png amn_LE.png
  • bt_fb_on_2022.svgbt_fb_over_2022.svg
  • bt_twitter_on_2022.svgbt_twitter_over_2022.svg
  • bt_youtube_on_2022.svgbt_youtube_over_2022.svg
  • bt_instagram_on_2022.svgbt_instagram_over_2022.svg
The Korea Times
amn_close.png
amn_bl.png
National
  • Politics
  • Foreign Affairs
  • Multicultural Community
  • Defense
  • Environment & Animals
  • Law & Crime
  • Society
  • Health & Science
amn_bl.png
Business
  • Tech
  • Bio
  • Companies
  • World Expo 2030
amn_bl.png
Finance
  • Companies
  • Economy
  • Markets
  • Cryptocurrency
amn_bl.png
Opinion
  • Editorial
  • Columns
  • Thoughts of the Times
  • Cartoon
  • Today in History
  • Blogs
  • Tribune Service
  • Blondie & Garfield
  • Letter to the Editor
amn_bl.png
Lifestyle
  • Travel & Food
  • Trends
  • People & Events
  • Books
  • Around Town
  • Fortune Telling
amn_bl.png
Entertainment & Arts
  • K-pop
  • Films
  • Shows & Dramas
  • Music
  • Theater & Others
amn_bl.png
Sports
  • Hangzhou Asian Games
amn_bl.png
World
  • SCMP
  • Asia
amn_bl.png
Video
  • Korean Storytellers
  • POPKORN
  • Culture
  • People
  • News
amn_bl.png
Photos
  • Photo News
  • Darkroom
amn_NK.png amn_DR.png amn_LK.png amn_LE.png
  • bt_fb_on_2022.svgbt_fb_over_2022.svg
  • bt_twitter_on_2022.svgbt_twitter_over_2022.svg
  • bt_youtube_on_2022.svgbt_youtube_over_2022.svg
  • bt_instagram_on_2022.svgbt_instagram_over_2022.svg
  • Login
  • Register
  • Login
  • Register
  • The Korea Times
  • search
  • all menu
  • Login
  • Subscribe
  • Photos
  • Video
  • World
  • Sports
  • Opinion
  • Entertainment & Art
  • Lifestyle
  • Finance
  • Business
  • National
  • North Korea
  • 1

    Builders vie for leadership in modular construction

  • 3

    INTERVIEW'Coexistence of different art hubs across Asia is necessary': Art Week Tokyo Director

  • 5

    Austrian former nurse of Korean leprosy patients dies at age 88

  • 7

    Korea picks up 1st gold in roller skating

  • 9

    Top 1% of singers earned $3.4 mil. each on average in 2021: data

  • 11

    Yoon meets police officers, firefighters on Chuseok holiday

  • 13

    New York City area gets one of its wettest days in decades, as rain swamps subways and streets

  • 15

    FM visits France to campaign for Korea's World Expo bid

  • 17

    With teammate's help, inconsolable shooter regroups in time to win bronze

  • 19

    Korea wins bronze in mixed team pistol event for 14th shooting medal

  • 2

    Poll shows 79% of young Koreans agree on need to improve ties with Japan

  • 4

    What to know and what's next for Travis King, the American soldier who ran into North Korea

  • 6

    S. Korea lose to N. Korea in women's football quarterfinals

  • 8

    Korea to extend $5 mil. worth of fertilizer aid to Ukraine via US agency

  • 10

    Households in capital area hold 70% more in assets than non-metropolitan families: data

  • 12

    Korean industry minister visits Africa for World Expo bid, economic ties

  • 14

    Korean baseball team trying to adjust to playing surface, new ball in China

  • 16

    Republicans reject own funding bill, US government shutdown imminent

  • 18

    What happens if US government enters a shutdown?

  • 20

    Korean diver Woo Haram bags 9th Asian Games medal

Close scrollclosebutton

Close for 24 hours

Open
  • The Korea Times
  • search
  • all menu
  • Login
  • Subscribe
  • Photos
  • Video
  • World
  • Sports
  • Opinion
  • Entertainment & Art
  • Lifestyle
  • Finance
  • Business
  • National
  • North Korea
Finance
  • Companies
  • Economy
  • Markets
  • Cryptocurrency
Mon, October 2, 2023 | 02:48
Economy
Bank loan interest rates could reach 14-year high, raising household debt burden
Posted : 2022-09-25 15:41
Updated : 2022-09-26 11:08
Anna J. Park
Print PreviewPrint Preview
Font Size UpFont Size Up
Font Size DownFont Size Down
  • facebook
  • twitter
  • kakaolink
  • whatsapp
  • reddit
  • mailto
  • link
A man in Seoul looks at a bank's street banner advertisement that shows the currently soaring loan interest rates. Newsis
A man in Seoul looks at a bank's street banner advertisement that shows the currently soaring loan interest rates. Newsis

By Anna J. Park

With the U.S. Federal Reserve taking giant rate hike steps three consecutive times in a row, local banks' housing loan interest rates are fast approaching a 14-year high ― by the end of the year ― overshadowing the Korean economy's growth potential and looming large in regard to the household debt crisis.

According to the local banking industry, the interest rates of the four major banks' housing mortgage loans range from 4.38 percent to 6.829 percent a year as of mid-September. It's an increase of 0.706 percentage points in two months in the upper band of the interest rate range, as the interest rates from 4.21 percent to 6.123 percent back mid-July this year.

Given that the U.S. Fed is highly likely to take another giant step of raising its rate by 75 basis points in early November, and the Bank of Korea (BOK) is also expected to take a big step of raising its rate by 50 basis points in the next month, the country's interest rates for housing mortgage loans are forecast to near 8 percent by the end of the year.

The possibility of an 8-percent interest rate is quite plausible if the BOK decides to raise its key interest rates by 50 basis points ― two consecutive times in a row in October and in November. It would make local banks' housing loans increase by 1 percentage point, stoking the upper limit of the banks' mortgage loans to some eight percent by the end of the year. In this case, it will be the highest interest rate for housing mortgage loans in 14 years since the global financial crisis in 2008.

Considering the already all-time-high level of household debt in the country, which amounts to 1,870 trillion won ($1.3 trillion) as of the end of June this year, market watchers warn that the speedily increasing interest rates could deal a blow to the Korean economy.

According to the BOK's statistics systems, it is roughly estimated that the burden from the rising interest rates on household debts would increase by some 3.4 trillion won ($2.4 billion).

As small business owners and those who excessively received loans to purchase real estate are expected to be hit the hardest due to the increased cost of interest rates, the government is being urged to come up with policies that reduce their burden.

"It's unavoidable to further raise the country's key interest rates, due to the widening interest gap between the U.S. and Korea. Yet, if the interest rates go up too fast and too much, it could result in a more difficult situation in the longer term, requiring the government to take appropriate policies to soften the shock," Baek In-seok, a macro-financial analyst and senior research fellow at the Korea Capital Market Institute, said.




Emailannajpark@koreatimes.co.kr Article ListMore articles by this reporter
 
miguel
wooribank
LG
Top 10 Stories
1Trapped along borders Trapped along borders
2[INTERVIEW] Risk-averse culture is forcing daring creators to flee showbiz INTERVIEWRisk-averse culture is forcing daring creators to flee showbiz
3Koreans adapt to soaring food prices Koreans adapt to soaring food prices
4Education ministry prohibits parents from recording classes Education ministry prohibits parents from recording classes
5[VIDEO] Bustling Chuseok: Namsan Hanok Village immerses visitors in Korea's rich traditions VIDEOBustling Chuseok: Namsan Hanok Village immerses visitors in Korea's rich traditions
6Builders vie for leadership in modular construction Builders vie for leadership in modular construction
7Are 'finfluencers' helping or harming investment community? Are 'finfluencers' helping or harming investment community?
8Value, consumer goods, financial stocks expected to gain momentum after Chuseok holiday Value, consumer goods, financial stocks expected to gain momentum after Chuseok holiday
9[INTERVIEW] ROK-US alliance is win-win partnership: KUSAF chief INTERVIEWROK-US alliance is win-win partnership: KUSAF chief
10Will blue crabs from Italy arrive on Korean dining tables?Will blue crabs from Italy arrive on Korean dining tables?
Top 5 Entertainment News
1M+ deputy director discusses Seoul's potential to challenge Hong Kong as Asia's art hub M+ deputy director discusses Seoul's potential to challenge Hong Kong as Asia's art hub
2[INTERVIEW] 'Coexistence of different art hubs across Asia is necessary': Art Week Tokyo Director INTERVIEW'Coexistence of different art hubs across Asia is necessary': Art Week Tokyo Director
3Trailblazing nonagenarian artist honored for redefining Korean fiber art Trailblazing nonagenarian artist honored for redefining Korean fiber art
4[INTERVIEW] With '30 Days,' Kang Ha-neul finds new level of comfort in acting INTERVIEWWith '30 Days,' Kang Ha-neul finds new level of comfort in acting
5Rwandan artists bring diversity to Seoul's art scene Rwandan artists bring diversity to Seoul's art scene
DARKROOM
  • Turkey-Syria earthquake

    Turkey-Syria earthquake

  • Nepal plane crash

    Nepal plane crash

  • Brazil capital uprising

    Brazil capital uprising

  • Happy New Year 2023

    Happy New Year 2023

  • World Cup 2022 Final - Argentina vs France

    World Cup 2022 Final - Argentina vs France

CEO & Publisher : Oh Young-jin
Digital News Email : webmaster@koreatimes.co.kr
Tel : 02-724-2114
Online newspaper registration No : 서울,아52844
Date of registration : 2020.02.05
Masthead : The Korea Times
Copyright © koreatimes.co.kr. All rights reserved.
  • About Us
  • Introduction
  • History
  • Contact Us
  • Products & Services
  • Subscribe
  • E-paper
  • RSS Service
  • Content Sales
  • Site Map
  • Policy
  • Code of Ethics
  • Ombudsman
  • Privacy Statement
  • Terms of Service
  • Copyright Policy
  • Family Site
  • Hankook Ilbo
  • Dongwha Group