South Korean deposit rates rise as household borrowing costs increase

In South Korea, banks raised rates on fixed-term deposits, making it easier for savers to find higher returns.

In September, 10.6% of newly opened fixed-term deposits offered at least 4%, the first time the share had reached double digits since December 2023.

The average rate on new deposits was 3.39%, while one-year deposits averaged 3.57%.

Borrowing also became more expensive: the average rate on new household loans rose to 4.96%, up 0.79 percentage points from a year earlier.

The shift followed two consecutive Bank of Korea rate increases in July and August, and banks raised rates on several popular deposit products.

Higher rates benefit savers but burden borrowers, with more household loans now carrying rates of 4% or above.

The Bank of Korea held its policy rate in October, but political and financial circles expect a possible increase in the first half of next year.