Bank lending rates hit record low in November

Banks’ lending rates fell to a new all-time low in November as interest rates declined amid the central bank’s monetary easing, the Bank of Korea said yesterday.

The average rate for banks’ new loans to households and firms stood at 4.94 percent last month, down 0.04 percentage point from the previous month, according to the Bank of Korea.

The November data marked the lowest level since 1996 when the central bank began to compile related data.

The central bank’s lowered the key interest rates in July and October in a bid to prop up the slowing economy, beset by the protracted euro zone debt crisis.

A cut in the central bank’s policy rate usually drives down market rates, causing banks’ lending rates moving in tandem with market rates to fall.
The average rate for fresh lending to households reached 4.74 percent in November, down 0.1 percentage point from the previous month, it added.

Meanwhile, the average rate for bank deposits hit a two-year low of 3.02 percent last month, down 0.06 percentage point from the previous month. It marked the lowest level since 3.01 percent tallied in October 2010. Korean lenders’ loan-deposit spread reached 2.62 percentage points in November.

Yonhap