Rates for new household loans recedes from high

The rates on new loans extended by domestic banks to households declined in October from an 18-month high in the previous month mainly because banks handled the bulk of low-rate home lending, the central bank sad yesterday.

The average rates for new loans extended to households stood at 5.56 percent in October, down 0.1 percentage point from the previous month, according to the Bank of Korea (BOK).

Household lending rates rose for the third straight month in September as the country’s financial regulator ramped up efforts to curb new debt, leading lenders to charge more for the privilege.

But banks’ household lending rate retreated last month mainly because they handled most of the loans related to supplying new apartments, which come with relatively low rates.

When combined with fresh lending to companies, the average rates inched up 0.01 percentage point on-month to 5.77 percent, the central bank said.

The market interest rates largely remained flat on expectations that the central bank is likely to freeze the key rate for an extended period of time. The central bank left the rate at 3.25 percent for the fifth straight month in November due to continued global economic uncertainties.

Meanwhile, the average rate on bank deposits stood at 3.71 percent in October, unchanged from the previous month, it added.

Yonhap