South Korean interest rates drive divergence for savers and borrowers

Recent financial statistics from the Bank of Korea reveal a widening gap between savers and borrowers due to rising interest rates. In September, the proportion of new fixed-term deposits with interest rates of 4% or higher surged to 10.6%, a twentyfold increase from the previous month. This marks the first time in nearly three years that high-interest deposits have reached double digits.

Conversely, borrowers are facing increased financial pressure. The proportion of new household loans with interest rates below 4% fell to 9.6%, the lowest level in 34 months. Meanwhile, the share of high-interest loans of 5% or more jumped to 31.6%, up from 7.2% in the same period last year. Additionally, the share of variable-rate mortgage loans has risen to 65.8%, increasing household vulnerability to market fluctuations.