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Bank lending rates on household loans rise in March

Bank lending rates on new household loans climbed from a month earlier in March while interest paid on fresh bank deposits dipped to a six-month low, central bank data showed Thursday.

The average interest rate on new household loans extended by local banks came to 3.24 percent in March, up 0.03 percentage point from the previous month, according to preliminary data from the Bank of Korea (BOK).

Apartment complex in Seoul (Yonhap)
Apartment complex in Seoul (Yonhap)

The on-month rise marked a turnaround from a drop of 0.07 percentage point in February.

The increase apparently comes ahead of what many believe to be an imminent U.S. rate hike, possibly in June. The U.S. Federal Reserve is widely expected to twice raise its policy rate this year following its first rate hike in nearly a decade late last year.

The BOK has kept its own policy rate frozen at a record low of 1.5 percent since June 2015.

The average interest rate on fresh loans extended to local firms also gained 0.03 percentage point from a month earlier to 3.6 percent in March, according to the data.

On the other hand, the average interest rate paid by local banks on new deposits continued to decline, slipping 0.02 percentage point from the previous month to 1.56 percent in March.

The March figure marks the lowest level since 1.54 percent registered in September.

The gap between interest paid to and by banks widened to 1.94 percent, compared with 1.89 percent in the previous month. (Yonhap)

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