[THE INVESTOR] Bank interest rates on new household loans dropped from a month earlier in May, central bank data showed on June 29.

However, interest paid by banks on fresh deposits fell at a faster clip, further widening the gap between the interest rates on deposits and loans.

The average interest rate on fresh household loans came to 3.16 percent in May, down 0.01 percentage point from the previous month, according to the data from the Bank of Korea.

The May reading marked the second consecutive month of drop, though the rate of drop slowed from a 0.07 percentage point cut in April.

The drop apparently came in anticipation of a rate cut by the central bank, while the US Federal Reserve was expected to further delay its rate hike.

As anticipated, the US Fed kept its key rate frozen in June while the BOK slashed its own policy rate to a new record low of 1.25 percent.

In June, the average interest rate on corporate loans remained unchanged from a month earlier at 3.55 percent. The average rate on all fresh loans extended by local banks came to 3.45 percent, up 0.01 percentage point from the previous month.

The average rate paid by banks on fresh deposits shed 0.02 percentage point to 1.54 percent over the cited period.

The gap between the interest rates paid to and by banks came to 1.91 percent, compared with 1.88 percent in the previous month.

(theinvestor@heraldcorp.com)