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S. Korea's mortgage loan rate falls to 13-month low

Xinhua, June 29, 2016 Adjust font size:

Mortgage loan rate in South Korea fell to the lowest in 13 months, boosting worries about growing household debts, as the Bank of Korea (BOK) cut its benchmark interest rate to a new record low, central bank data showed on Wednesday.

Rate for fresh home-backed loans extended by banks stood at an annualized rate of 2.89 percent in May, down 0.04 percentage points from a month earlier, according to the BOK data.

It was the lowest since April last year and kept falling for five months in a row.

Earlier this month, the BOK lowered its policy rate by a quarter percentage point to a new record low of 1.25 percent, indicating the mortgage loan rate is set to go down further.

It boosted concerns about massive household debts, which have maintained a record-breaking trend amid the protracted low interest rates.

Rates for overall household debts inched down 0.01 percentage point from a month earlier to 3.16 percent in May. It declined from 3.24 percent in March to 3.17 percent in April.

Rate for corporate loans was unchanged at 3.55 percent in May from the previous month. Lending rate for big corporations was unchanged at 3.27 percent, with the rate for mid-sized companies falling 0.02 percentage points to 3.71 percent. Endit