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Commercial banks to raise floating mortgage rates this week

South Korea's commercial banks are set to raise floating rates for mortgage loans this week in line with a benchmark money market rate hike, industry officials said Sunday.

The top five banks -- KB Kookmin, Shinhan, Woori, KEB Hana and NH Nonghyup -- will reflect a rise in the Cost of Funds Index, a benchmark for variable-rate mortgages, starting from Monday.

The COFIX, which is decided by the Korea Federation of Banks, has increased for three consecutive months since September on expectations of interest rate hikes in South Korea and the United States. 

(Yonhap)
(Yonhap)

The benchmark for new mortgage loans climbed 0.15 percentage point to 1.77 percent in November, marking the largest monthly hike in nearly seven years.

NH Nonghyup Bank said it will add 0.15 percentage point on floating rate mortgages, which would adjust the 2.83-4.42 percent rate to 2.98-4.57 percent.

Shinhan Bank will apply new rates of 3.12-4.43 percent on mortgages, and Hana Bank will charge 3.37-4.5 percent on new loans, they said.

The moves come after South Korea's central bank raised the key rate by a quarter percentage point to 1.5 percent last month amid clear signs of an economic recovery.

A growing number of market experts are also forecasting the U.S. central bank will raise its key interest rate several times in 2018 on signs of robust growth and a tax overhaul. (Yonhap)

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