Bank of Korea September deposit rates rise as bank bond yields surge

The Bank of Korea said Thursday that weighted-average deposit rates paid by commercial banks on new savings products rose to 3.45 percent in September, up 0.24 percentage points from the previous month, while lending rates rose 0.17 percentage points to 4.57 percent.

Kim Seong-jun, head of the financial statistics team in the central bank's economic statistics division, attributed the increase chiefly to a sharp rise in bank bond yields, a benchmark rate for lenders. The same rise drove higher fixed-rate mortgage lending, the Bank of Korea said.

The spread between bank lending and savings deposit rates narrowed to 1.12 percentage points, down 0.07 percentage points from the previous month. The figures cover new business handled during the month.

Within deposits, pure savings deposits paid 3.39 percent, up 0.25 percentage points from August, while market-linked financial products paid 3.69 percent, up 0.16 percentage points. Corporate lending rates averaged 4.49 percent, up 0.19 percentage points, and household lending rates averaged 4.96 percent, up 0.20 percentage points. Mortgage rates rose 0.22 percentage points to 4.88 percent.

On an outstanding-balance basis, total deposit rates rose 0.07 percentage points to 2.27 percent and total lending rates rose 0.08 percentage points to 4.48 percent.

Rates at non-bank financial institutions moved in mixed directions. Mutual savings banks cut their one-year deposit rate by 0.07 percentage points to 3.81 percent and their general lending rate by 0.43 percentage points to 9.80 percent. Credit unions raised deposit rates 0.07 percentage points to 3.69 percent while cutting lending rates 0.03 percentage points to 5.25 percent, and agricultural and community mutual finance institutions raised deposit rates 0.05 percentage points to 3.44 percent while lifting lending rates 0.16 percentage points to 5.09 percent. Saemaul Geumgo also raised deposit rates 0.05 percentage points, to 3.62 percent, and cut lending rates 0.20 percentage points to 4.97 percent.