The Bank of Korea released its weighted average interest rates for June 2026 on the 28th, showing an upward trend in lending rates across the banking sector. According to the report, the new loan interest rate at deposit banks reached 4.31% in June, rising 12 basis points from the previous month, driven primarily by a 23-basis-point surge in small and medium-sized enterprise (SME) lending rates. The data reflects ongoing adjustments in the Korean banking sector's interest rate structure as banks respond to market conditions and borrower demand patterns.
New Loan Rates Rise 12 Basis Points in June
Deposit banks' new loan interest rate stood at 4.31% in June, marking a 12-basis-point increase from the previous month. SME loan rates showed the steepest climb, surging 23 basis points during the period. Household loan rates increased at a more modest pace, rising only 4 basis points month-over-month.
Savings Deposit Rates Increase 15 Basis Points
The new savings deposit interest rate reached 3.08% in June, climbing 15 basis points from the previous month. The spread between loan rates and savings deposit rates narrowed to 123 basis points, contracting by 3 basis points compared to the previous month.
Fixed-Rate Household Loan Proportion Declines to 22.7%
The proportion of fixed-rate household loans among new loans continued its downward trajectory. In June, fixed-rate loans accounted for 22.7% of new household borrowing, down from 24.6% in May. Lee Hye-young, head of the Bank of Korea's financial statistics team, stated that mortgage rates did not rise as much as market rates, attributing this partly to an increase in the proportion of borrowers choosing variable rates.
Outstanding Balance Rates Show Modest Increases
As of the end of June, the total outstanding deposit rate stood at 2.07%, up 4 basis points from the end of the previous month. The total outstanding loan rate reached 4.34%, rising 3 basis points month-over-month. The spread between total outstanding loan rates and deposit rates narrowed to 227 basis points, contracting by 1 basis point from the previous month.
Non-Bank Financial Institutions Report Mixed Rate Changes
Non-bank financial institutions showed divergent interest rate movements in June. Mutual savings banks and credit unions (Saemaul Geumgo) saw their loan rates decline by 38 basis points and 21 basis points respectively. Conversely, credit cooperatives (Shinhyup) and mutual finance institutions experienced rate increases of 20 basis points and 9 basis points respectively.
FAQ
What was the new loan interest rate at Korean deposit banks in June 2026?
The new loan interest rate at deposit banks reached 4.31% in June 2026, representing a 12-basis-point increase from the previous month.
Why did the fixed-rate household loan proportion decline in June?
The fixed-rate household loan proportion fell to 22.7% in June from 24.6% in May. According to Lee Hye-young, head of the Bank of Korea's financial statistics team, this decline reflects an increase in the proportion of borrowers choosing variable rates, as mortgage rates did not rise as much as market rates.
How did non-bank financial institutions' loan rates change in June 2026?
Non-bank financial institutions showed mixed rate movements. Mutual savings banks and credit unions saw loan rates decline by 38 basis points and 21 basis points respectively, while credit cooperatives and mutual finance institutions experienced increases of 20 basis points and 9 basis points respectively.
