Banks' average rate on new home mortgage loans was 4.66% a year in August, up 0.18 percentage points (%p, the difference between two rates) in a month. That is the highest in 3 years and 9 months, since November 2022. Higher loan rates mean that borrowing the same amount costs more in interest every month.<\/p>\n\n\n\n
In the same month, the share of fixed-rate loans (loans whose rate doesn't change for a set period) among new mortgages rose from 31.9% to 35.3%. In August, variable rates rose more than fixed rates, narrowing the gap between the two, so locking in a rate became that much cheaper. The Bank of Korea thinks this narrowing gap had an effect.<\/p>\n\n\n\n
Among new mortgages in August, the fixed rate rose 0.12 percentage points, from 4.76% to 4.88%. The variable rate (on loans whose rate is reset every few months in line with market rates) rose 0.18 points, from 4.35% to 4.53%. The gap between them narrowed from 0.41 points to 0.35 points.<\/p>\n\n\n\n
Put simply, fixed rates are still more expensive, but the gap with variable rates shrank in a month.<\/p>\n\n\n\n
All rates here are on a new-loan basis. They average the rates on loans made that month, weighted by amount, so they differ from the rates of people who already have loans.<\/p>\n\n\n\n
Say you borrow KRW 300 million (Korean won) over 30 years with equal principal-and-interest payments (the same amount every month, covering both principal and interest). At August's average rates, a fixed loan (4.88%) costs about KRW 63,000 more a month than a variable one (4.53%). At July's average rates (4.76% and 4.35%), the gap was about KRW 73,000.<\/p>\n\n\n\n
Keeping the same rate for all 30 years is a simple assumption for the calculation. In practice, many fixed-rate mortgages have their rate reset after five years, such as 5-year fixed loans (periodic or hybrid types).<\/p>\n\n\n\n
Think of a fixed rate as insurance against rising rates. The extra you pay each month is the premium. Unlike insurance, though, you don't get this premium back even if rates fall while your rate is locked in.<\/p>\n\n\n\n
More people signed up in the month the premium fell. The fixed-rate share of new mortgages rose 3.4 percentage points, its first increase in 10 months. Across all household loans, the fixed-rate share also rose, from 21.0% to 23.5%, its first increase in 13 months.<\/p>\n\n\n\n
The average is not your loan. One borrower who bought a home in Seoul's Gangbuk-gu district chose a fixed rate even though it was 0.8 percentage points higher than the variable rate. On a KRW 300 million loan, that adds about KRW 140,000 to the monthly payment, but the borrower said, \"I decided to reduce future uncertainty, even if it means paying more right now.\" The variable rate this borrower compared was on a product whose rate changes every three months.<\/p>\n\n\n\n
When loan rates rise, people usually think of market rates first. But the Bank of Korea team head in charge explained that in August, \"market rates fell slightly,\" yet overall mortgage rates rose. Regular bank mortgages, excluding government-supported policy loans, carry relatively high rates, and their share grew in August.<\/p>\n\n\n\n
COFIX (an index of what banks pay to raise money through deposits, bank bonds and more), the benchmark (reference rate) for variable mortgages, was 3.18% in August on a new-loan basis, unchanged from the previous month. The benchmark stayed put, yet the average variable rate rose 0.18 percentage points. Why variable rates rose more than fixed rates can't be told from this data alone.<\/p>\n\n\n\n
While loan rates rose, rates on the deposit side (savings deposit rates) stayed at 3.21%. So the margin banks keep from the gap between new loan and new deposit rates (the loan-deposit spread) widened from 1.06 percentage points to 1.19 points, the first widening in 7 months.<\/p>\n\n\n\n
In September, market rates moved. The U.S. 10-year Treasury yield topped 5% a year, and the U.S. 30-year Treasury yield topped 5.61% for the first time since 2002. On Sept. 15, the yield on 5-year (maturing in five years) bank bonds (bonds banks issue to borrow money) was 4.655%, the highest in about 2 years and 11 months, since October 2023.<\/p>\n\n\n\n
The 5-year bank bond yield is the benchmark for 5-year fixed mortgage rates. Banks add a spread to it and subtract preferential discounts to set loan rates. The explanation given in reports goes like this: when U.S. Treasury yields rise, Korean bonds become relatively less attractive, and bank bond yields face upward pressure too. One bank economist said, \"Bank bonds, which are sensitive to this, inevitably face upward pressure as well.\"<\/p>\n\n\n\n
The 5-year bank bond yield fell from 4.655% on Sept. 15 to 4.513% on Sept. 23, but it is still higher than on March 23 (4.388%). Herald Business cited both rising U.S. Treasury yields and the Bank of Korea's base rate hike as causes of this rise. On Sept. 23, fixed mortgage rates at the five major banks were 4.90-6.89% a year.<\/p>\n\n\n\n
With the fixed-rate benchmark up, fixed rates face upward pressure again. But the same report said COFIX, the benchmark for variable rates, is also likely to rise. Whether the gap that narrowed in August will widen again is not yet known, and the gap when you take out a loan may differ from August's average.<\/p>\n\n\n\n
These moves are not in the August data. This data gives no grounds to blame U.S. Treasury yields for August's rebound in the fixed-rate share.<\/p>\n\n\n\n
The Bank of Korea team head said, \"In the past, too, fixed-rate loans tended to increase when the gap between fixed and variable rates narrowed.\" The team head added that the bank believes the narrowing gap \"may have had an effect\" this time as well. The Bank of Korea did not state the cause definitively either.<\/p>\n\n\n\n
What's different this time is how the gap narrowed. It didn't narrow because fixed rates fell; both rose, and variable rates rose more. Those who chose fixed also pay 4.88%, higher than in July.<\/p>\n\n\n\n
August, when fixed-rate loans rose again, was a month when the price of choosing fixed, that is, the gap between the two rates, narrowed. That gap is also what the Bank of Korea thinks had an effect.<\/p>\n\n\n\n
One more thing: the average mortgage rate can rise even when market rates stay put, depending on which loans were made the most. That's what happened in August. The average rate in the news isn't the rate you'll get.<\/p>\n\n\n\n
The rule of thumb fits in one line. Fixed vs. variable isn't a game of guessing whether rates will rise; it's a calculation of whether the extra monthly cost of a fixed rate is worth paying to remove uncertainty. Work out the monthly difference using the two rates your bank offers you, and compare it with how much you can spare each month.<\/p>\n\n\n\n
Sources Glossary<\/strong> BITPRESS articles are information to help your investment decisions, not a recommendation to buy or sell any stock or coin. Investment decisions and their results are your own responsibility.<\/p>","protected":false},"excerpt":{"rendered":" 8\uc6d4 \uc0c8 \uc8fc\ub2f4\ub300 \uc911 \uace0\uc815\uae08\ub9ac \ube44\uc911\uc774 31.9%\uc5d0\uc11c 35.3%\ub85c 10\uac1c\uc6d4 \ub9cc\uc5d0 \ub298\uc5c8\ub2e4. \ubcc0\ub3d9\uae08\ub9ac\uac00 \ub354 \uc624\ub974\uba70 3\uc5b5 \uc6d0 \uae30\uc900 \uace0\uc815\uc774 \ubcc0\ub3d9\ubcf4\ub2e4 \ub9e4\ub2ec \ub354 \ub0b4\ub294 \ub3c8\uc774 \uc57d 7.3\ub9cc \uc6d0\uc5d0\uc11c 6.3\ub9cc \uc6d0\uc73c\ub85c \uc904\uc5c8\uace0, \ud55c\uad6d\uc740\ud589\uc740 \uc774 \uaca9\ucc28 \ucd95\uc18c\uc758 \uc601\ud5a5\uc774 \uc788\uc5c8\ub2e4\uace0 \ubcf8\ub2e4. \uadf8\ub7f0\ub370 8\uc6d4 \uae08\ub9ac\ub97c \uc62c\ub9b0 \uac74 \uc2dc\uc7a5\uae08\ub9ac\uac00 \uc544\ub2c8\uc5c8\ub2e4.<\/p>","protected":false},"author":3,"featured_media":3494,"comment_status":"closed","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"bitpress_en_title":"","bitpress_en_desc":"","footnotes":""},"categories":[801],"tags":[896,898,511,1020,654,897,972,895,900,899],"class_list":["post-3493","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate","tag-896","tag-898","tag-511","tag-1020","tag-654","tag-897","tag-972","tag-895","tag-900","tag-899"],"acf":[],"yoast_head":"\n
https:\/\/www.mt.co.kr\/economy\/2026\/09\/30\/2026093011180473074<\/a>
https:\/\/www.seoul.co.kr\/news\/economy\/finance\/2026\/10\/01\/20261001029004<\/a>
https:\/\/www.seoul.co.kr\/news\/economy\/finance\/2026\/09\/16\/20260916029002<\/a>
https:\/\/biz.heraldcorp.com\/article\/10886323<\/a><\/p>\n\n\n\n
\n\n\n\n
New-loan rate<\/strong> \u2014 The average of the rates on loans made that month, weighted by amount; it differs from the rates on loans already taken out.
Fixed rate<\/strong> \u2014 A loan rate that stays the same for a set period (e.g., five years) even if market rates change.
Variable rate<\/strong> \u2014 A loan rate that is reset every few months in line with a benchmark rate.
COFIX<\/strong> \u2014 An index of what banks pay to raise money through deposits, bank bonds and more; it is the benchmark for variable mortgage rates.
Bank bonds<\/strong> \u2014 Bonds banks issue to borrow money; the 5-year yield is the benchmark for 5-year fixed mortgage rates.
Equal principal-and-interest repayment<\/strong> \u2014 Paying back a loan with the same combined amount of principal and interest every month.
Policy loans<\/strong> \u2014 Government-supported mortgages, whose rates are lower than those of regular bank mortgages.
Loan-deposit spread<\/strong> \u2014 The gap between the rates banks charge on new loans and pay on new deposits; it is the margin banks keep.<\/p>\n\n\n\n