Average Fixed-Rate Mortgage Rate Hits '5.11%'... Highest Since Records Began

BOK: "September 2026 Weighted Average Interest Rates of Financial Institutions"
Short- and long-term market rates rose after benchmark rate hike at end of August
Mortgage rates up 0.22 percentage points; variable rates nearing 4.8%
"Benchmark rates falling in October... mortgage rates could fall again"

The average interest rate on fixed-rate products among the mortgages offered by banks has exceeded 5%. This is the first time mortgage rates have topped 5% since statistics were first compiled in 2013.

According to the "September 2026 Weighted Average Interest Rates of Financial Institutions," released by the Bank of Korea on October 29, the interest rate on mortgages at deposit-taking banks, based on newly extended loans, was 4.88% per year last month, up 0.22 percentage points from the previous month. It has risen for five consecutive months since May, when it stood at 4.32%.

The rate on fixed-rate mortgages rose 0.23 percentage points from the previous month to 5.11% per year, exceeding 5% for the first time. It was the highest in more than 13 years, since statistics for fixed- and variable-rate loans began to be compiled separately in January 2013. The rate on variable-rate mortgages also rose 0.23 percentage points to 4.76% per year, nearing 4.8%. Fixed-rate mortgage rates have risen for 12 consecutive months, while variable-rate mortgage rates have risen for four consecutive months.

As banks extended more variable-rate mortgages, the share of fixed-rate mortgages fell 1.1 percentage points from the previous month to 34.2%.

ATMs operated by major banks across Seoul. Yonhap News Agency

"Benchmark interest rates for households and businesses, including rates on certificates of deposit (CDs) and short- and long-term bank bonds, all rose by around 0.2 percentage points in September after the benchmark rate increased at the end of August," said Kim Seongjun, head of the Financial Statistics Team at the Bank of Korea's Economic Statistics Department 1. "Adjustments to lending margins and tighter management of household loans may also have had an impact, but the biggest factor was that benchmark rates were reflected to a considerable extent."

In fact, the yield on five-year bank bonds rose 0.18 percentage points, from 4.35% in August to 4.53% in September. The yield on six-month bank bonds also climbed 0.29 percentage points, from 3.34% to 3.63%. The 91-day CD rate rose 0.2 percentage points, from 2.97% in August to 3.17% in September.

However, he said the rise in mortgage rates could slow in October, or rates could even turn downward. "Through October 23, the yield on five-year bank bonds had fallen 0.16 percentage points," Kim said. "If mortgage rates track benchmark rates, their rise could slow or they could decline."

The rate on general credit loans rose 0.16 percentage points from the previous month to 6.49% per year, marking a fourth consecutive monthly increase. The rate on jeonse deposit loans rose 0.22 percentage points to 4.57% per year.

The rate on corporate loans rose 0.17 percentage points from the previous month to 4.49% per year. The rate for large companies rose 0.16 percentage points to 4.37% per year, while the rate for small and medium-sized enterprises rose 0.25 percentage points to 4.63%. "Rates for both large companies and SMEs rose, reflecting a considerable portion of the increases in benchmark rates such as CD and bank bond rates," Kim said. "However, the increase in rates on loans to large companies was relatively small, as some banks extended more low-interest loans."

The rate on interest-bearing deposits rose 0.24 percentage points from the previous month to 3.45% per year, reflecting the rise in market rates. By category, rates on pure savings deposits rose 0.25 percentage points to 3.39%, mainly due to time deposits. Rates on marketable financial products rose 0.16 percentage points to 3.69%, mainly due to financial bonds and certificates of deposit (CDs).

The lending-deposit rate spread, based on newly extended loans and deposits, narrowed by 0.07 percentage points from the previous month to 1.12 percentage points. On an outstanding-balance basis, it widened by 0.01 percentage points to 2.21 percentage points.

Among non-bank financial institutions, interest rates on one-year fixed-term deposits rose across the board except at savings banks. Rates rose 0.07 percentage points at credit unions and 0.05 percentage points each at mutual finance institutions and community credit cooperatives, while savings bank rates fell 0.07 percentage points.

Lending rates, based on general loans, fell across the board except at mutual finance institutions. Savings bank rates posted the largest drop, falling 0.43 percentage points. Rates fell 0.20 percentage points at community credit cooperatives and 0.03 percentage points at credit unions, while rates at mutual finance institutions rose 0.16 percentage points.

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