S. Korean bank lending rates continue to fall

South Korean banks’ lending rates continued to fall in July for the second month in a row. The decrease was largely driven by expectations of a potential interest rate cut by the Bank of Korea (BOK) later this year.

According to the BOK’s data released on Friday, the weighted average rate for new bank loans fell by 0.16 percentage points to an annualised 4.55 per cent in July. This followed a 0.07 percentage point decline in June.

The central bank has maintained its benchmark interest rate at 3.50 per cent since January 2023. However, growing expectations for a rate cut have prompted banks to lower their lending rates.

Corporate loans experienced a more modest decline, with rates falling by 0.10 percentage points to 4.78 per cent in July.

Rates for big corporations decreased by 0.11 percentage points to 4.89 per cent, while rates for small companies dropped by 0.10 percentage points to 4.69 per cent.

Household loans experienced a more significant decline, with rates falling by 0.20 percentage points to 4.06 per cent in July.

Mortgage loan rates dropped by 0.21 percentage points to 3.50 per cent, and credit loan rates decreased by 0.26 percentage points to 5.78 per cent.

Meanwhile, the weighted average rate for new bank deposits fell by 0.10 percentage points to 3.41 per cent in July.

Attribution: Xinhua

Subediting: Y.Yasser