BANKS SLASH INTEREST RATES ON LOANS

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Interest rates on bank loans have dropped nearly one percentage point in the past two weeks. With banks continuing to adjust their additional rates this week as well, interest rates on bank loans are expected to drop to the 6% range.

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Interest rates on bank loans have dropped nearly one percentage point in the past two weeks, as banks embarked on adjusting their additional rates. The annual floating rates on mortgages at the top four commercial banks ranged from 4.6 percent to 7.148 percent as of Jan. 20. The interest rate ceiling is down 0.962 percentage points, while the floor has decreased by 0.48 percentage points from two weeks ago. Financial authorities and the public have pointed out that the gap between the lending and deposit rates is too wide. That's why banks are curtailing their additional rates, while the COFIX, which determines floating interest rates, has declined by 0.05 percentage points since Jan. 17. The ceiling on fixed-rate mortgages and credit loan rates also fell around 0.4 percentage points during the same period. While the key rate has been raised yet again, money market rates are going down on hopes that authorities will soon stop raising base rates in Korea and abroad, and the stabilized capital market. Banks are expected to continue cutting their rates this week as well. Major commercial banks have already begun adjusting their additional and prime rates. Hana Bank is to lower the rates on some of its mortgages and jeonse loans by up to 0.3 percentage points from Wednesday. Kookmin Bank is also set to cut rates on some of the loans by up to 1.3 percentage points from Thursday. As such, interest rates of 7 percent or higher on loans offered by the top four commercial banks will no longer exist from this week.