Bank of Korea says deposit rates rose while loan rates fell in July

The Bank of Korea said Wednesday that the weighted average interest rate on new savings deposits at deposit-taking institutions rose to 3.21 percent in July, up 0.13 percentage point from the previous month. The average rate on new loans fell 0.04 percentage point to 4.27 percent, narrowing the spread between the two to 1.06 percentage points.

The decline in overall lending rates was driven by a 0.07 percentage point drop in corporate loan rates, which offset a 0.14 percentage point increase in household borrowing costs. On the deposit side, rates climbed across the board, with pure savings accounts rising 0.14 percentage point and market-linked financial products gaining 0.12 percentage point.

When measured by outstanding balances rather than new transactions, both deposit and loan rates moved higher. The total deposit rate based on end-of-month balances increased 0.08 percentage point to 2.15 percent, while the total loan rate edged up 0.03 percentage point to 4.37 percent.

Among non-bank financial institutions, mutual savings banks saw the sharpest increases, with their one-year fixed deposit rate jumping 0.47 percentage point to 4.21 percent and general loan rates soaring 1.03 percentage points to 10.51 percent. Credit unions also recorded gains, lifting deposit rates by 0.13 percentage point and loan rates by 0.14 percentage point.

In contrast, mutual finance institutions reported a slight decrease in lending rates of 0.15 percentage point, even as their deposit costs rose by the same margin. Saemaeul Geumgo was the only category to see deposit rates fall, dropping 0.05 percentage point, though its lending rates increased significantly by 0.48 percentage point.