S. Korea's lending rates keep rising faster than deposit rates

SEOUL, March 27 (Xinhua) -- South Korea's lending rates by financial institutions kept rising faster than deposit rates, increasing burden for households to repay debts, central bank data showed Tuesday.

The weighted average lending rate by financial institutions, including banks and deposit takers, was an annualized rate of 3.56 percent in February, up 0.03 percentage points from a month earlier, according to the Bank of Korea (BOK).

During the same period, the deposit rates rose 0.02 percentage points to 1.23 percent, widening the gap between borrowing and savings rates to 2.33 percent.

The gap was highest since November 2014, expanding the net interest margin of banks and increasing burden for households to pay back debts.

The country's household debts maintained a record-breaking trend as the BOK cut its benchmark interest rate from 3.25 percent in July 2012 to an all-time low of 1.25 percent in June 2016.

It encouraged households to purchase new home with borrowed money.

The new government under President Moon Jae-in, who took office in May last year, announced a set of measures to control speculative investment in the property market.

The BOK raised its policy rate by 25 basis points in November last year to 1.5 percent, the first rate hike in almost six and a half years.

The central bank was expected to tighten its monetary stance further in the near future as the U.S. Federal Reserve hiked its benchmark rate by a quarter percentage point to a range of 1.5-1.75 percent last week. Enditem