August Mortgage Loan Rates Rise to 4.66%, Highest Since November 2022

Bank of Korea's "Weighted Average Interest Rates of Financial Institutions, August 2026"


Fixed-rate mortgages account for 35.3% of new loans


Household loan rates climb to 4.76%, the highest since November 2024

The average interest rate on mortgage loans handled by banks rose to 4.66%. This is the highest level in three years and nine months since November 2022, when it reached 4.74%.

According to the “Weighted Average Interest Rates of Financial Institutions in August 2026” released by the Bank of Korea on September 30, deposit banks’ mortgage loan rates (based on newly handled loans) stood at an annual average of 4.66% last month, up 0.18 percentage points from the previous month.

The gap between fixed-rate and variable-rate mortgage loan rates narrowed from 0.41 percentage points in July to 0.35 percentage points last month. Fixed-rate mortgages increased by 0.12 percentage points from the previous month to an annual rate of 4.88%, marking an 11-month consecutive rise since October of last year (3.97%). However, the variable-rate mortgage rate rose by 0.18 percentage points from the previous month to 4.53%, further narrowing the spread with the fixed rate.

Although the five-year bank bond yield (AAA, 4.35%) fell by 0.04 percentage points compared to the previous month, Kim Sungjun, Head of the Financial Statistics Team at the Bank of Korea’s Economic Statistics Department 1, explained, “While market rates declined slightly as the weight of general bank mortgage loans—excluding policy loans—increased, mortgage loan rates continued to rise.”

As the proportion of variable-rate mortgages decreased, the share of fixed-rate loans increased. The proportion of fixed-rate mortgage loans within total mortgage loans reached 35.3%, up 3.4 percentage points from the previous month, marking a reversal after ten months since November of last year. Kim added, “We believe that the increased share of fixed-rate loans was mainly due to the significant rise in variable-rate mortgage rates compared to fixed rates last month. Historically, when the gap between fixed and variable rates narrows, the share of fixed-rate loans tends to increase.”

Jeonse (rental deposit) loans also rose by 0.16 percentage points from the previous month to reach an annual rate of 4.35%. General credit loans climbed by 0.36 percentage points to 6.33% from the previous month, the highest since January 2024 (6.38%). Including these categories, overall household loan rates rose by 0.12 percentage points to 4.76%, the highest since November 2024 (4.79%).

Corporate loan interest rates also increased by 0.10 percentage points from the previous month to an annual average of 4.30%. For large corporations, rates edged up by 0.03 percentage points to 4.21%, while for small and medium-sized enterprises, rates jumped by 0.16 percentage points to 4.38%. Kim explained, “In July, the rate dropped by 0.16 percentage points due to some banks offering low-interest policy loans. Last month, the base effect led to a 0.16 percentage point rebound.”

As for deposit rates for savings-type deposits, products such as fixed-term deposits fell slightly (-0.01 percentage points), but market-type financial products increased by 0.05 percentage points, resulting in an unchanged average rate of 3.21% from the previous month. In detail, interest rates on pure savings deposits dropped by 0.02 percentage points to 3.14%. Market-type financial product rates, mainly certificates of deposit (up 0.18 percentage points) and repurchase agreements (up 0.03 percentage points), climbed to 3.53%. Kim attributed the slight drop in fixed-term deposit rates to “the average rate being pulled down as large-scale short-term deposits from local governments were placed at low rates with a specific bank.”

The difference between lending and deposit rates (based on new loans) expanded by 0.13 percentage points from the previous month to 1.19 percentage points. On a balance basis, the gap fell by 0.02 percentage points to 2.20 percentage points from the previous month.

The deposit and loan rates for one-year maturity time and installment savings at non-bank financial institutions rose across the board except for savings banks. Specifically, for one-year maturity time and installment deposits, savings banks’ deposit rates fell by 0.33 percentage points, while credit unions increased by 0.06 percentage points, mutual finance institutions by 0.14 percentage points, and community credit cooperatives by 0.09 percentage points. For general loan rates, savings banks decreased by 0.28 percentage points, but credit unions increased by 0.12 percentage points, mutual finance institutions by 0.32 percentage points, and community credit cooperatives by 0.02 percentage points from the previous month.

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