Expectations for a cut within the year are low… Impact of rising market interest rates
Deposit interest rate 0.5%p up… Loan interest rates are likely to rise as well
Panoramic view of the headquarters of the four major banks./Each company
[마이데일리 = 이보라 기자] Commercial banks are successively increasing deposit and loan interest rates. This is due to the Bank of Korea freezing its base interest rate, which weakened expectations of an interest rate cut and led to a rise in market interest rates.
According to the financial sector on the 24th, Woori Bank raised the highest interest rate for ‘WON Plus deposits’ by 0.05 percentage points (p) from the existing 2.55% to 2.6% the previous day.
On the 22nd, Hana Bank also raised the highest interest rate for ‘Hana Term Deposit’ by 0.05% point from 2.55% to 2.60%. This is the second time following an increase of 0.05% on the 1st of this month. Previously, on the 6th, Kookmin Bank also raised the interest rate on ‘KB Star Term Deposit’ by 0.5% point to 2.55%. It was also raised by 0.5% point on the 22nd of last month.
Internet banks began raising prices last week. On the 17th, Kakao Bank raised the interest rates on one-year deposits and savings accounts by 0.10 percentage points each. Accordingly, the basic interest rate for term deposits is 2.60% per year, and for free savings accounts, it is 2.80% per year. K Bank also raised the ‘Code K Term Deposit’ interest rate by 0.05 percentage points to 2.55% on the 15th.
The reason why deposit interest rates are rising is because market interest rates have shown an upward trend again as expectations for a base rate cut have weakened. An official from a commercial bank said, “As the Bank of Korea’s base rate cut took longer than expected, market interest rates have risen and we are raising interest rates accordingly.”
In line with this, lending interest rates are also showing signs of rising. As of the 24th, Kookmin Bank’s fixed mortgage interest rate was 3.73-5.13%, up 0.13 percentage points at the lower end. Shinhan Bank’s 6-month financial bond credit loan interest rate also rose 0.05 percentage points from last week to 4.04-5.05%.
Bank lending interest rates are expected to rise in the future. This is because all indicators that are the basis for calculating interest rates are rising. The interest rate on 5-year financial bonds (AAA) rose 0.085%p from 2.851% on the 1st of last month to 2.936% on the 23rd of this month. Last month, the 1-year financial bond (AAA) interest rate also rose 0.038%p from the previous month to 2.543%. Based on the new handling amount in August, Cofix was 2.52%, up 0.03 percentage points from 2.49% the previous month. It has been one year since Copix rose.
The day before, the Bank of Korea held a Monetary Policy Committee meeting and froze the base interest rate at 2.5%. Regarding the direction of interest rates within three months, four out of six members of the Monetary Policy Committee left open the possibility of further cuts. There were five members in the Monetary Policy Committee in August, but in October, one Monetary Policy Committee member changed his opinion from a cut to a freeze. It is interpreted that adjustment of the timing and extent of interest rate cuts is inevitable.
As recently as last August, the market expected one additional cut within the year, but recently the forecast that a cut within the year will be difficult has become more prevalent. Yun Yeo-sam, a member of Meritz Securities, said, “It is not easy to implement an interest rate cut in November that was not implemented even when real estate prices were temporarily stabilized during the Monetary Policy Committee in August.” He added, “Our country’s economy is exposed to uncertainties such as the results of the Korea-US and US-China tariff negotiations and the semiconductor industry situation, but if those risks are controlled, consumption will improve due to the effects of expansionary fiscal policies and rising asset prices. “It is difficult to raise expectations of an interest rate cut as we are following the trend,” he analyzed.
Reporter Bora Lee bora@mydaily.co.kr
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