Bank of Korea's "Weighted Average Interest Rates of Financial Institutions for June 2026"
Fixed-rate mortgage share at 37.7% among newly issued loans
Lowest level since February 2014 (31.8%)
Shift toward variable rates as borrowers favor lower interest options
The average interest rate on mortgage loans handled by banks has risen to 4.36%. As fixed-rate mortgage rates have climbed for a ninth consecutive month, the gap between fixed and variable mortgage rates has widened to 0.26 percentage points.
A promotional flyer for jeonse loan guidance is posted at a commercial bank in downtown Seoul. Photo by Yonhap News Agency
According to the "Weighted Average Interest Rates of Financial Institutions for June 2026" released by the Bank of Korea on July 28, the mortgage loan rate (based on newly issued loans) at deposit banks rose by 0.04 percentage points from the previous month to an annual rate of 4.36% in June. This marks a second consecutive month of increases.
The gap between fixed and variable mortgage loan rates has grown further to 0.26 percentage points. The fixed-rate mortgage stood at 4.53% per annum, up 0.09 percentage points from the previous month. This marks the ninth consecutive month of increases since October last year (3.97%), influenced by a rise in benchmark interest rates as well as the Bogeumjari Loan rate. The five-year bank bond rate, used as a benchmark for fixed-rate mortgages, rose 0.15 percentage points during the same period from 4.17% to 4.32%. The variable rate (4.27%) also increased for the first time in three months, but its rise (0.04 percentage points) was smaller than that of the fixed rate.
As a result, the proportion of variable-rate mortgages—which currently carry relatively lower rates—increased, while the share of fixed-rate loans decreased. The proportion of fixed-rate loans among all mortgage lending fell by 3.9 percentage points from the previous month to 37.7%, the lowest level since February 2014 (31.8%). Lee Hyeyoung, Head of the Financial Statistics Team 1 at the Bank of Korea, explained, "As Bogeumjari Loans are included in the fixed-rate category, the actual level of fixed-rate mortgages excluding them could be even higher," adding, "As the gap between fixed and variable rates has widened significantly, borrowers tend to favor the cheaper option, causing the fixed-rate share to drop and the variable-rate share to rise."
Lee further noted, "However, based on loan balances, the decline in the proportion of fixed-rate mortgages (from 63.9% to 63.1%) has not been substantial," and emphasized, "We need to closely monitor whether the reduction in fixed-rate share becomes a lasting trend." She added, "As a policy rate hike could cause short-term rates to rise more than long-term rates, over time, the fixed-rate share might bounce back."
Jeonse loan rates rose 0.10 percentage points to 4.07% per annum. General credit loans jumped to 5.72% per annum, up 0.23 percentage points from the previous month. These increases were driven by a rise in benchmark short-term bank bond rates and, in part, by an increased share of lending to medium- and low-credit borrowers at some banks. Including these, the comprehensive household loan rate increased by 0.04 percentage points from the previous month, reaching 4.50% per annum. Lee commented, "This was due to the rise in both mortgage and general credit loan rates."
Corporate loans rose to 4.27% per annum, up 0.14 percentage points from the previous month. Interest rates for large corporations increased by 0.07 percentage points to 4.17% per annum, while rates for small and medium-sized enterprises jumped by 0.23 percentage points to 4.38% per annum. Lee explained, "As short-term market rates, such as 91-day certificates of deposit (CD) and short-term bank bonds, increased, interest rates for both large corporations and small- and medium-sized enterprises climbed, resulting in an overall rise in corporate loan rates."
Savings deposit rates, including time deposits, rose by 0.15 percentage points from the previous month to record an annual rate of 3.08%. Broken down by item, pure savings deposit rates climbed 0.14 percentage points, mainly due to time deposits, reaching 3.02%. Rates for market-type financial products, led by finance bonds and CD rates, rose 0.23 percentage points to 3.36%.
The deposit-lending interest rate spread (based on newly issued loans) narrowed by 0.03 percentage points from the previous month to 1.23 percentage points, marking a fifth consecutive month of decline since February (1.43%). Based on outstanding balances, the spread was 2.27 percentage points, down 0.01 percentage points from the previous month.
Among non-bank financial institutions, the one-year term deposit acceptance rate also rose across all categories. Lending rates (for general loans) increased for credit unions (up 0.20 percentage points) and cooperative financial institutions (up 0.09 percentage points), but fell for savings banks (down 0.38 percentage points) and community credit cooperatives (down 0.21 percentage points).
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