New bank loan rates rise 13 basis points to 4.40 percent in August
Average interest rates on newly extended bank loans rose by 13 basis points to 4.40 percent in August 2026, according to Bank of Korea data. The average rate on new bank deposits remained flat at 3.21 percent.
Lending costs climb across sectors
The 13 basis point increase in new loan rates to 4.40 percent was driven by higher borrowing costs across both corporate and retail segments.
Small and medium-sized enterprises experienced the sharpest increase, with rates rising 16 basis points from 4.22 percent in July to 4.38 percent in August.
Large corporate borrowing rates increased by 3 basis points to 4.21 percent, bringing the overall corporate lending rate to 4.30 percent.
Meanwhile, household loan rates rose by 12 basis points to 4.76 percent, compared to 4.64 percent in the previous month.
Rates on outstanding bank loans also ticked up by 3 basis points to reach 4.40 percent as of late August.
Deposit rates stall as funding shifts
On the liability side, newly taken deposit rates held flat at 3.21 percent in August, reflecting divergent product trends.
Yields on marketable financial instruments increased by 5 basis points to 3.53 percent, while savings deposit rates edged down by 2 basis points to 3.14 percent.
Rates on outstanding deposits rose by 5 basis points to 2.20 percent, supported by increases across transferable savings and time deposits.
As a result, the spread between new lending and deposit rates widened to 1.19 percentage points.
Margin expansion at borrower expense
Widening interest margins provide commercial banks with profitability gains at the direct expense of vulnerable borrowers.
SMEs and households absorb steep rate increases while retail deposit compensation remains virtually frozen.
This quiet tightening of real financial conditions will test private sector debt sustainability.
Source: Interest Rates (Aug 2026)
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