South Korean mortgage rates spike as long‑term bond yields hit multi‑year highs

South Korea’s major banks reported that fixed‑rate mortgage lending reached 4.39%‑7.33% in early June, the highest level in 3 years and 8 months. The rise follows a sharp increase in long‑term government bond yields worldwide – 30‑year Korean bonds above 4.3%, U.S. bonds above 5%, and comparable peaks in the UK and Japan – driven by higher oil prices and renewed inflation concerns after the Middle‑East conflict.

Regional banks are also lifting their mortgage rates. iM Bank’s 6‑month variable rate moved from 5.30‑5.80% to 5.36‑5.86%; BNK Gyeongnam Bank’s 5‑year fixed rate rose from 5.19‑5.69% to 5.59‑6.19%; and Gwangju Bank’s rates increased from 4.41‑7.36% to 4.49‑7.46%. These banks cite the climb in five‑year government‑bond yields and the risk of a rapid inflow of loan demand from borrowers shifting away from larger banks as reasons for tightening terms.

The higher borrowing costs affect households carrying about 2,000 trillion won of debt, raising concerns about affordability and prompting tighter loan‑management policies across both major and local lenders.