South Korea's rate hikes spur deposit inflows and widen commercial real‑estate loan spreads

The Bank of Korea raised its base interest rate for the first time in 3½ years, prompting a sharp rise in mortgage rates that now range from 4.77% to over 7% at the country’s five largest banks. Higher deposit rates have drawn funds back to banks, with term‑deposit balances increasing by about 16 trillion won (≈$12 bn) in just two weeks, while balances in lower‑rate savings accounts fell by roughly 17.8 trillion won.

The same rate hikes have pushed commercial‑real‑estate financing into a new high‑interest phase. Senior office loan rates sit around 4.04%, whereas logistics‑center loans are about 70 basis points higher at 4.74%, and the all‑in cost of financing reached 4.43%. The widening spread raises concerns of negative leverage and is reshaping investment demand toward assets with stable cash flows and lower financing costs.