SEOUL, Dec. 22 (Korea Bizwire) – South Korean mortgage rates gained considerably in November from the previous month due to rising market interest ahead of a U.S. rate hike, data showed Thursday.
Annual mortgage rates charged by South Korea’s top five lenders — KB Kookmin Bank, Shinhan Bank, Woori Bank, KEB Hana Bank and NH Bank — averaged 3.28 percent last month, up 0.28 percentage point from a month earlier, according to the data by the Korea Federation of Banks.
The increase was attributed to a rise in COFIX, a benchmark lending rate for mortgage loans, on expectations for a U.S. interest rate increase.
Last week, the U.S. Federal Reserve raised its benchmark interest rate by 0.25 percentage point to a range of 0.5-0.75 percent, citing the recovery of the world’s largest economy.
Market watchers also said Donald Trump’s surprise victory in the November U.S. election has fanned the uptrend in South Korean mortgage rates.
Over the past three years, the big five lenders’ average mortgage rate has surged to 3.28 percent from 2.74 percent, they said.
Local banks are widely expected to jack up their mortgage rates in January, when the latest U.S. rate increase is reflected in COFIX.
Rising mortgage rates are feared to be a big financial burden on South Korean households, which could further dampen their spending. Mortgages accounted for about 71 percent of all household loans extended by banks as of end-2015. South Korea’s household debt hit a record high of 1,257.3 trillion won (US$1.05 trillion) as of end-June, according to central bank data.