South Korean fresh loan rates up to 2.82% in May

The expansion follows four consecutive months of declines.

Average lending rates on fresh bank loans rose to 2.82% in May, up 2 basis points (bp) from 2.8% in April, according to data from the Bank of Korea (BOK).

This was driven by a sharp increase in corporate lending.

The slight increase on lending rates follows four consecutive months of decline. The BOK slashed its key rates twice to reach an all-time low of 0.75% in March, and later 0.5% in May.

In contrast, interest rates paid by banks on fresh deposits fell sharply on increased market liquidity, dipping to 1.07% in May from 1.2% the previous month. This is now the sixth consecutive month of contractions in this area.

Meanwhile, the average rate on fresh household loans came at 2.81%, down 8bp from a month earlier, data revealed.

On the other hand, the average rate on new corporate loans rose to 2.83% over the same period, or 6bp up.

Photo courtesy of Sesinado from Pexels.