] Interest rates on new personal bank loans slightly dropped from a month earlier in August and interest on new deposits also dipped, central bank data showed on Sept. 29.
The average interest rate on fresh personal loans extended by local banks came to 2.95 percent last month, down 0.01 percentage point from the previous month, according to the Bank of Korea or BOK.
The August reading marked the fifth consecutive month of drop. Lower rates could prompt households to borrow more money for investments and home purchasing, a BOK official said.
South Korea’s household borrowings reached a record high of 1,257.3 trillion won (US$1.149 trillion) as of end-June.
Last month, the government vowed to control the supply of new apartments in a bid to curb demand for mortgages, the main culprit behind soaring household debt.
The average interest rate on new mortgages came to 2.70 percent in August, up from 2.66 percent a month earlier, according to the BOK.
The average interest rate on all new loans remained unchanged at 3.23 percent as the rate on new corporate loans came to 3.38 percent, up 0.01 percentage point from the previous month.
The average rate paid by banks on fresh deposits shed 0.01 percentage point to 1.31 percent over the cited period. The gap between the interest rates paid to and by banks came to 1.92 percent, up 0.01 percentage point from the previous month.