Korean bond yields rise as household loan growth slows
Korean Treasury yields reached annual highs in September 2026, while household lending growth slowed to 0.6 trillion won. The Bank of Korea (BOK) reported the figures on October 15, alongside stronger corporate borrowing and quarter-end deposit inflows.
Higher yields squeeze corporate funding
The BOK attributed higher yields to Middle East tensions, oil prices, expectations of a Federal Reserve rate increase and rising global government bond yields.
Three-year yields peaked at 4.12 percent on September 28; ten-year yields reached 4.60 percent on September 15. Household loan growth slowed from 3.5 trillion won in August to 0.6 trillion in September: mortgages added 2.9 trillion, while other loans fell 2.3 trillion.
The detailed corporate table shows loan growth rising from 9.7 trillion to 10.7 trillion won, including 7.5 trillion for large firms and 3.2 trillion for SMEs.
Corporate bond net redemptions widened from 0.9 trillion to 3.4 trillion won as higher rates restrained issuance.
Large firms borrowed for bond repayments and facilities investment.
Quarter-end cash returns to banks
Bank deposits rose 29.1 trillion won in September, versus 0.1 trillion in August.
Transferable deposits added 24.7 trillion as companies managed quarter-end financial ratios; time deposits added 2.1 trillion.
Asset managers lost 11.1 trillion won after gaining 23.5 trillion, with money market funds losing 25.6 trillion.
The KOSPI reached 6,838 at September-end before falling to 6,009 on October 14. The BOK attributed October's decline primarily to concerns about slower AI investment and stronger semiconductor competition.
Credit totals do not reconcile
The source contains conflicting credit totals.
Its opening puts September corporate loan growth at 9.7 trillion won, the detailed table at 10.7 trillion and Reference 1 at 7.7 trillion.
Reference 1 also reports household loan growth of 5.4 trillion won, against 0.6 trillion in the main table, without explaining the difference.
Source: Financial Market Trends in September 2026
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