S Korean banks raise rates on household loans to 11-year high in Sept.

17:33, October 28, 2009      

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South Korean banks' household lending rates grew at the sharpest rate in 11 years and a half in September amid wide expectations on the central bank's key rate hike, the central bank said Wednesday.

According to the Bank of Korea (BOK), the average interest rate on household loans hit 5.96 percent, up 0.33 percentage point from a month earlier.

The September reading stood at the highest level since March 1988 when the figure posted an on-month growth rate of 0.37 percentage point, the BOK said.

In addition, the nation's mortgage loan rate also grew at 0.32 percentage point on month, logging 5.77 percent, according to the BOK.

The mortgage loan rate growth hit the highest level for this year as well, it added.

Considering the size of local banks' mortgage loans amounting to 260.1 trillion won (217.8 billion U.S. dollars), the recent rate hike is expected to result in additional 830 billion-won (695.1 million-U.S. dollar) worth interests for local households, local daily the Seoul Economy reported.

Both secured and unsecured loans also saw a gain in interest rates, 0.39 percentage point and 0.59 percentage point, respectively, the BOK said.

Source: Xinhua
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