SEOUL– South Korean banks’ mortgage rates rose to the highest level in more than nine years in April as borrowing costs are on the rise amid the central bank’s push for monetary tightening to bring inflation down, central bank data showed Tuesday.
Rates on mortgage loans extended by local banks stood at 3.9 percent per annum on average in April, up 0.06 percentage point from a month earlier, according to the data from the Bank of Korea (BOK).
They were the highest since the rates rose to 3.97 percent in March 2013.
Rates on unsecured household loans also rose 0.16 percentage point on-month to 5.62 percent in April, which were the highest since June 2014.
The rises came as the BOK has increased its policy rate at a fast pace in recent months to keep rising inflation pressure in check.
Last week, the BOK hiked the interest rate by a quarter percentage point to 1.75 percent. The rate increase was the fifth of its kind since August last year.
BOK Gov. Rhee Chang-yong has hinted at further hikes, saying that the central bank will place top priority on price stability for the time being in the face of mounting inflation pressure.
Rising borrowing costs have added to the financial burden on many indebted households who have taken out loans to buy homes and tide over the pandemic.
Source: Yonhap News Agency