South Korea Posts Decline in Bank Lending Rates
(MENAFN) South Korean banks’ lending rates declined for the eighth consecutive month in July, driven by ongoing reductions in the central bank’s policy rate, data from the Bank of Korea (BOK) revealed Wednesday.
The weighted average interest rate on new bank loans decreased by 0.03 percentage points from June, settling at an annualized 4.06 percent in July. This marks a steady downward trend since December last year.
The BOK has trimmed its benchmark interest rate by 25 basis points twice this year—in February and May—bringing it to 2.50 percent. These cuts followed similar reductions of 25 basis points each in October and November 2024.
Rates for new household loans slipped slightly by 0.01 percentage point to 4.20 percent in July. However, mortgage loan rates for households edged up 0.03 percentage points to 3.96 percent, while credit loan rates climbed 0.31 percentage points to 5.34 percent.
New corporate loan rates also edged down, falling 0.02 percentage points to 4.04 percent. Breaking it down, loans to large companies fell 0.01 percentage points to 3.99 percent, and those to small firms dropped 0.03 percentage points to 4.08 percent.
Meanwhile, the weighted average rate for new bank deposits declined by 0.04 percentage points to 2.51 percent in July.
The data underscores the ongoing impact of the central bank’s easing measures on lending costs amid evolving economic conditions.
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