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Interest Rates on Bank Deposits Posting the Record Low at 3%

Interest Rates on Bank Deposits Posting the Record Low at 3%

Posted August. 28, 2003 15:00,   

한국어

Korean banks` average interest rates (based on account balances) on accounts including demand deposits and the savings accounts slipped for the first time in history to within the 3% mark.

The Bank of Korea publicized a report yesterday entitled “The trend of interest rates of financial institutions for July”, in which the average interest rates on bank accounts were estimated at 3.97% annually.

It was the first time that the interest rates fell to the 3% level. The rates fell by 0.04% points from 4.01% in June of this year.

Interest rates on deposits other than demand deposits and savings accounts have also declined to record lows for the past four months in a row to stand at 4.81% in July.

Interests on loans including call loans and cash-advance accounts averaged 7.10%, which was a record low. When call loans are excluded, the rate stood at 7.08%, an eight-straight-month decline.

As the Bank of Korea cut the call rate by 0.25% points on July 10, average interest rates on saving deposits including bank debentures went down 0.06% points from June to stand at 4.09% in July based on newly opened accounts.

Interest rates on loans except for call loans and cash-advance accounts dropped 0.04% points to 6.20% on average.

Interest rates on savings deposits have been on the decline for three months since May while interest rates on bank loans have slid for four months.

Interest rates on consumer debt decreased by 0.06% points, to stand at 6.41%.

As the interest rates on both short-term financing and deposits have declined, interest rates on mortgage loans have gone down from 6.15% to 6.07%. Interest rates on bank deposit-collateralized loans also decreased from 6.38% to 6.35%.



Joong-Hyun Park sanjuck@donga.com