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Mortgage rates climb to near 2-year high amid tightened lending rules

Published: 16 Nov. 2025, 14:57 Updated: 16 Nov. 2025, 15:23

This undated file photo shows a notice of mortgage loan rates at a local bank in Seoul. [YONHAP]

Korea's mortgage rates have rebounded to the 6 percent range for the first time in two years amid a rise in market interest rates, prompting banks to further tighten new home loans under stricter lending regulations, financial sources said Sunday.

Fixed-rate mortgage loans at the nation's four major lenders — KB Kookmin, Shinhan, Hana and Woori — based on five-year bank bonds stood at 3.93-6.06 percent as of Friday, according to the sources.

It marks the first time since December 2023 that hybrid mortgage rates at the four lenders have reached the 6 percent range. Both the upper and lower bounds have risen from the end of August, when the corresponding rates were 3.46-5.546 percent.

The increase comes as yields on five-year bank bonds — the main benchmark for hybrid mortgage rates — have climbed sharply in recent months.

Interest rates on top-tier credit loans also rose during the same period, reaching 3.79-5.25 percent from 3.52-4.99 percent, tracking gains in one-year bank bond yields, another key reference rate.

Variable-rate mortgage loans tied to the new cost of funds index (COFIX) increased to 3.77-5.768 percent from 3.66-5.505 percent.

Although COFIX itself edged up only 1 basis point over the period, banks appear to have raised lending rates more aggressively due to tighter regulations on household and property-related borrowings. COFIX serves as a benchmark for many Korean mortgage products.

Pedestrians walk by a banner advertising home mortgage loan products at a bank in Seoul on Sept. 7. [YONHAP]

The recent increase in lending rates reflects growing investor doubts over whether the U.S. Federal Reserve and the Bank of Korea (BOK) will continue their monetary easing policies.

In an interview with foreign media on Wednesday, BOK Gov. Rhee Chang-yong said the scale, timing and even the possibility of a shift in rate policy would depend on incoming data. His remarks pushed yields on all Korean Treasury bonds — except the one-year bonds — to their highest levels of the year.

Market participants interpreted his comments as hinting at a potential pause, or even a reversal, in anticipated rate cuts.

With a BOK rate cut this month increasingly unlikely, and with housing prices and the exchange rate adding to uncertainty, higher loan rates and tighter mortgage limits are expected to continue through the end of the year, according to market observers.

Yonhap