[Edaily Reporter PARK JONG-HWA ] Credit loan interest rates have risen to the 6% range due to the Bank of Korea’s benchmark interest rate hike and other factors. The interest burden is expected to grow even heavier for so-called “debt investors”—those who took out loans beyond their means to fund investments and other purposes.

On the 1st, NH Nonghyup Bank raised its credit loan interest rates (based on 6-month financial bonds) from 4.78%–5.98% to 4.8%–6%. This marks the first time in about 20 months—since early January of last year—that the upper limit of credit loan interest rates based on 6-month financial bonds at the five major commercial banks (Shinhan, KB Kookmin, Hana, Woori, and NH Nonghyup) has exceeded 6%. Interest rates on unsecured loans at other commercial banks are also approaching 6%. On that day, Shinhan Bank’s unsecured loan rates ranged from 4.94% to 5.94%, while Woori Bank’s ranged from 4.95% to 5.95%. As for unsecured loan rates based on 12-month financial bonds, the upper limit has long since surpassed 6% at all banks.

While the upper limit for commercial bank personal loan rates was in the 5.5% range as recently as the first half of the year, it began to rise sharply in the second half. This is because the Bank of Korea, by clearly signaling a hawkish stance and foreshadowing benchmark rate hikes, has driven up market interest rates. The yield on 6-month financial bonds—which is used to calculate credit loan rates—has risen from 2.83% at the start of the year to 3.45% as of yesterday. In fact, with the Bank of Korea raising the benchmark rate consecutively in July and August and banks’ funding costs increasing, loan rates are likely to rise even further.

When interest rates on unsecured loans rise, the interest burden increases not only for new borrowers but also for borrowers who took out variable-rate loans indexed to the 6-month financial bond yield. In particular, there are concerns that the repayment burden will become even heavier for those who took on excessive debt—such as “debt investors” and those who “borrowed every last penny”—to finance stock investments. Based on a simple calculation, if a borrower who took out a 100 million won personal loan sees the interest rate rise from 5.5% to 6%, their annual interest burden would increase from 5.5 million won to 6 million won.

However, demand for personal loans has been on a downward trend recently. The outstanding balance of personal loans at the five major commercial banks, which stood at 109.7533 trillion won last month, fell by 95.8 billion won to 109.6575 trillion won as of the 28th of last month. This marks the first decline in three months. This is interpreted as a result of banks not lowering their lending thresholds, combined with high interest rates and a sluggish stock market, which have led to a decrease in loan demand.