Loan rates drop to record low in June

[THE INVESTOR] The interest rate on residential property-backed loans dropped to a record low in June, Band of Korea data showed on July 28.

According to the BOK, the average interest rate on residential property-backed loans dropped to 2.77 percent in June, lowest seen since the BOK began compiling related data in September 2001. The previous record low was 2.81 percent in April 2015. 

The average interest rate on all household loans dropped 0.1 percentage point from May to come in at 3.06 percent in June.

However, the rates on loans approved in bulk, such as those given to those owning properties in large redevelopment projects, rose 0.04 percentage point from May to come in at 2.94 percent. The change is thought to have been fueled by rising concerns that default risks on such loans are growing.
The average interest rates on corporate loans also dropped 0.14 percentage point to 3.41 percent.

Along with the drop in loan rates, the interest rates on deposits also fell by 0.09 percentage point to 0.11 percentage point over the same period.

By Choi He-suk (cheesuk@heraldcorp.com)