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South Korea Lending Rates Drop for Sixth Month in May

(MENAFN) South Korean bank lending rates declined for the sixth month in a row, driven by successive policy rate reductions, according to data released Monday by the Bank of Korea (BOK).

In May, the weighted average interest rate on newly issued bank loans dropped slightly by 0.02 percentage points month-over-month, settling at an annualized 4.17 percent. This continued a steady downward trend that began in December last year, BOK figures showed.

The central bank has implemented a series of rate cuts, trimming its benchmark rate by 25 basis points each in October and November 2024, followed by two more identical cuts in February and May 2025. The current policy rate stands at 2.50 percent.

Rates on new household loans took a notable dip, falling 0.10 percentage points from April to reach 4.26 percent in May.

Among household lending, mortgage rates dropped 0.11 percentage points to 3.87 percent, while credit loan rates edged down 0.07 percentage points to 5.21 percent.

Meanwhile, interest rates on new corporate loans rose slightly by 0.02 percentage points, reaching 4.16 percent in May.

Breaking down the corporate figures, loans to large enterprises saw a 0.11 percentage point increase to 4.15 percent. In contrast, borrowing costs for small businesses declined 0.07 percentage points to 4.17 percent.

On the deposit side, the weighted average rate for new bank deposits slipped by 0.08 percentage points to an annualized 2.63 percent in May.

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