April Mortgage Loan Rate at 4.31%...First Decline in Seven Months

Bank of Korea “Weighted Average Interest Rates of Financial Institutions for April 2026”

Mortgage Rates Down 0.03 Percentage Points from Previous Month

Rise in Variable-Rate Loans Drives Drop in Fixed-Rate Share to Lowest in Over Four Years

The interest rates on mortgage loans handled by banks have turned downward for the first time in seven months. This shift is attributed to the increased issuance of variable-rate mortgages, which generally have lower interest rates. Meanwhile, the proportion of fixed-rate mortgages has dropped sharply, reaching its lowest level in four years and nine months.

Seoul apartment skyline. Photo by Yonhap News

According to the “Weighted Average Interest Rates of Financial Institutions for May 2026” released by the Bank of Korea on May 29, the mortgage loan interest rate (based on new loans) at deposit banks last month stood at an annual rate of 4.31%, down 0.03 percentage points from the previous month. This marks the first decline in seven months, since October last year (3.98%).

Lee Hye-young, head of the Financial Statistics Team 1 at the Bank of Korea, explained, “While the fixed-rate rose due to increases in Bogeumjari Loan rates, the share of variable-rate mortgages, which have comparatively lower rates, increased.”

The fixed-rate mortgage stood at 4.34% per annum, up 0.02 percentage points from the previous month, while the variable-rate mortgage dropped by 0.11 percentage points to 4.28%.

As variable-rate mortgages increased, the proportion of fixed-rate loans within new mortgages fell below 50%. Specifically, the share dropped by 13 percentage points to 47.8% compared to the previous month. This is the lowest level since July 2021 (43.9%).

General unsecured loans rose by 0.06 percentage points to 5.63% per annum compared to the previous month. Although short-term bank bond rates, which serve as benchmark rates, declined, the increase is attributed to some banks expanding loans to borrowers with mid- to low credit ratings. Jeonse deposit loans fell by 0.06 percentage points to 4.01% per annum.

Including these categories, household loans recorded a rate of 4.43% per annum, a decrease of 0.08 percentage points from the previous month, marking a turnaround after two months.

The fixed-rate proportion within household loans was 27.8%, down 7.7 percentage points from the previous month. The decline was due to a decrease in the share of both new fixed-rate mortgages and new fixed-rate jeonse deposit loans, bringing the fixed-rate proportion to its lowest since July 2022 (21.4%).

Corporate loans remained unchanged from the previous month at 4.14% per annum. For large companies, the rate declined by 0.02 percentage points to 4.09%, while the rate for small and medium-sized enterprises rose by 0.01 percentage points to 4.18%. Lee explained, “The decline in short-term market rates led to lower lending rates for large companies, but lending rates for SMEs increased due to some banks’ handling of high-interest acquisition finance.”

Interest rates on deposit-type savings products increased by 0.1 percentage points from the previous month to 2.92% per annum. By category, pure savings deposits—mainly time deposits—rose by 0.08 percentage points to 2.87%. Market-type financial products, focused on financial bonds and certificates of deposit (CDs), increased by 0.09 percentage points to 3.07% per annum.

The loan-to-deposit interest rate spread (based on new loans) narrowed by 0.1 percentage points to 1.27 percentage points compared to the previous month. The spread based on outstanding balances widened by 0.01 percentage points to 2.28 percentage points.

The one-year maturity deposit interest rates at non-bank financial institutions all increased. Savings banks and credit unions each rose by 0.12 percentage points, while mutual finance institutions and community credit cooperatives increased by 0.08 and 0.05 percentage points, respectively.

Lending rates (for general loans) also rose across the board. Savings banks saw the largest increase at 0.57 percentage points, followed by community credit cooperatives (0.26 percentage points), credit unions (0.1 percentage points), and mutual finance institutions (0.03 percentage points).

This content was produced with the assistance of AI translation services.