South Korean banks’ interest rates rise to eight year-high: report

The rising rates have spawned worries in households' repayment abilities.

South Korean banks' interest rates on household loans jumped to the highest level in nearly eight years in March, data from the Bank of Korea (BOK) showed.

The household loan rate came at 3.98% per year on average in March, 0.05 percentage points (ppt) higher than a month earlier.

It was reportedly the highest since the rate rose to as high as 4.02% in May 2014, reports Yonhap.

Banks' lending rates have reportedly been on an upward trend in line with the BOK's recent moves to raise borrowing costs to keep a lid on growing inflation pressure and rising household debt.

Earlier this month, the central bank raised its policy rate by a quarter percentage point to 1.5%, the fourth rate increase since August last year. The regulator has also hinted at further hikes in the near future.

Rising borrowing costs have reportedly spawned worries that they could deepen the burden on households who have taken out loans to tide them over during the pandemic and bought houses amid soaring home prices, according to Yonhap.