BANKS BLOOM AMID HIGH INTEREST RATES

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While small businesses are struggling to stay afloat amid the pandemic, commercial banks are booming these days on the rising interest rates. Those who have received bank loans are now at odds as to how to repay them. This year alone commercial banks have reaped more than 33 trillion won in interest income.

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The nation's top five commercial banks raised floating interest rates on housing mortgages concurrently. Some banks raised their annual interest rates to nearly 5 percent. The Cost of Fund Index, a barometer of floating interest rates on housing mortgages, surged 0.13 percentage points in just a month, prompting banks to raise loan interest. Compared to the key rate, which only rose 0.25 percentage points in one and a half years, market interest rates are rising much faster, to the dismay of many debtors.

[Soundbite] (Planning to receive housing loan) : "If interest rates are raised overnight, there's actually nothing I can do. I can't get a loan in advance just because I have to move into a new home on a designated date."

With demand for loans growing steadily and interest rates surging, commercial banks are reaping tremendous profits. As of Q3, domestic banks had earned 33.7 trillion won in interest income, nearly 3 trillion won more than during the corresponding period last year. The problem is that loan interest could surge even faster from now on. At the Monetary Policy Committee meeting scheduled for next week, the Bank of Korea is expected to further raise the key rate.

[Soundbite] Prof. Woo Seok-jin(Myongji University) : "Loan rates are likely to be raised to 5 percent. Although the key rate will not be raised to pre-pandemic levels, market rates will likely rise even more than before."

Financial Services Commission Chair Koh Seung-beom reiterated that it's hard for the government to meddle in the issue of market interest rates.