Bank lending rates hit 7-month high in August

SEOUL, Sept. 28 (Yonhap) -- South Korean banks' lending rates rose to a
seven-month high in August as market rates climbed amid prospects for an economic
recovery, the central bank said Monday.

The average lending rate for households and companies reached 5.61 percent last
month, up 0.08 percentage point from a month earlier, according to the Bank of
Korea (BOK). The August figure marked the highest level since January 2009 when
the rate came in at 5.91 percent.
Bank lending rates have been on the upward trend since May after hitting a record
low of 5.4 percent in April due to effects of the BOK's aggressive rate cuts. The
central bank cut the rate by a total of 3.25 percentage points between October
and February.
Market rates like returns on certificates of deposit (CDs) have recently risen as
they factored in expectations that the BOK may raise the policy rate in the near
future amid growing signs of an economic rebound.
Home-backed lending rates, which tie to the yields of CDs, reached 5.45 percent
in August, up 0.16 percentage point from the previous month and hitting a
seven-month high, the BOK added.
Meanwhile, average deposit rates reached 3.07 percent last month, up 0.15
percentage point from a month ago. Such rates rose above the 3 percent range for
the first time in six months, it said.
On Sept. 10, BOK Gov. Lee Seong-tae hinted that the bank could raise its key
interest rate if housing prices continue their upward trend.
sooyeon@yna.co.kr
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