South Korean banks' mortgage rates have been on the rise over the past year in tandem with U.S. rate hikes, market sources said Sunday.
Those rates, charged on home-backed loans, are widely projected to go up further down the road if the U.S. central bank sticks to its hawkish policy stance.
According to the sources, Nonghyup Bank has posted benchmark mortgage rates on mortgages at a range of 3.6 percent and 4.94 percent, which will go into effect from Monday.
The new rates, which will remain fixed for five years before turning floating, are up to 0.6 percentage point higher than a year earlier.
Shinhan Bank has hiked the base rate by 0.51 percentage point, while the comparable increase rate is 0.47 percentage point.
The increases come as the yield on five-year prime financial bonds, the benchmark for mortgage rates, has climbed by 0.6 percentage point over the last one-year period.
Last year, the Bank of Korea (BOK) jacked up its key interest rate once, while the U.S. Fed raised the federal funds rate three times.
Market watchers expected mortgage rates to continue to climb down the road in line with U.S. interest rate hikes.
Following last week's policy meeting, the Fed held its outlook of rate rises at three for this year, but revised the forecast for 2019 to three from two.
"If the Fed carries out rate increases as expected, the BOK will have no choice but to follow suit, which will lead to higher lending rates," a bank official said on the customary condition of anonymity. (Yonhap)
Kim Jung-mi firstname.lastname@example.org
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