A banner for mortgage loan service is seen attached outside a bank in Seoul on May 31. [NEWS1]
With key rate hikes increasingly seen as inevitable, borrowers are already growing concerned about the prospect of higher interest payments for their credit loans and mortgages.
Kim, a Seoul resident, bought a home early last year using a variable-rate mortgage with an interest rate that resets every six months. At the time, the benchmark rate had fallen to 2.5 percent, and many in the market expected the downward trend to continue.
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Confident that rates would keep easing, Kim opted for a floating-rate loan, an interest rate that adjusts over time based on changing market conditions, without hesitation. A little over a year later, however, the rate on Kim’s mortgage has risen above the level at which they had borrowed. The growing expectations of a benchmark rate hike have complicated Kim’s calculations.
