Korean lenders’ mortgage rates inched down Dec. 1 despite the central bank’s first rate increase in more than six years, a market source said.
In a monthly policy meeting, the Bank of Korea on Thursday raised the so-called base rate by a quarter percentage point to 1.5 percent amid clear signs of an economic recovery, snapping the 16-month streak of its wait-and-see stance after the last rate cut made in June last year.
An increase in the benchmark interest rate usually prompts commercial lenders to charge more on mortgages and other loans, and vice versa.
This time, however, major commercial lenders announced mortgage rate cuts of 30 basis points to nearly 40 basis points one day after the central bank move. A basis point equals 0.01 percentage point.
Analysts said the mortgage rate reductions came as market interest rates have already gone up after factoring in expectations of a key rate raise.
Also responsible was the BOK head’s remark made in a news conference after the rate-setting meeting that “the central bank will carefully judge whether to adjust the key rate additionally,” they pointed out.
By Alex Lee and newswires (email@example.com