South Korea Banks Record Increase in Lending Rates
The weighted average rate for new bank loans gained 0.04 percentage points from a month earlier to an annualized rate of 4.19 percent in December 2025 after going up 0.13 percentage points in the previous month, according to the Bank of Korea (BOK).
The BOK left its benchmark interest rate unchanged at 2.50 percent after reducing it by 25 basis points in February and May of 2025 and in October and November of 2024.
Market sentiment shifted away from anticipating additional monetary loosening amid ongoing won depreciation against the dollar and persistent concerns over household debt levels reaching critical thresholds.
Corporate borrowing costs demonstrated steeper increases, with the rate for banks' new corporate loans advancing 0.06 percentage points over the month to 4.16 percent in December.
The lending rate for large companies climbed 0.02 percentage points to 4.08 percent, while the rate for small and medium firms mounted 0.10 percentage points to 4.24 percent.
Consumer lending experienced parallel upward pressure. The rate for fresh bank loans to households rose 0.03 percentage points to 4.35 percent in December compared to the previous month.
Mortgage loan rate for households grew 0.06 percentage points to 4.23 percent, while credit loan rate soared 0.41 percentage points to 5.87 percent.
Deposit rates also trended upward, with the weighted average rate for new bank deposits rising 0.09 percentage points over the month to an annualized 2.90 percent in December.
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