The Bank of Korea's interest rate hike and inflation instability are expected to increase the burden on households.
The Korea Economic Research Institute (Hankyung-yeon), affiliated with the Federation of Korean Industries, analyzed today (25th) data on 'The Impact and Implications of Raising the Base Rate and Inflation on Household Loans'.
As the household loan interest rate moves in the same direction as the base rate, the Korea Economic Daily predicted that an increase in the base rate would act as a factor in raising the household loan rate.
The Bank of Korea Monetary Policy Committee (hereinafter referred to as the Monetary Policy Committee) raised the base interest rate from 0.75% per annum to 1.00% by 0.25 percentage points at today's monetary policy direction meeting.
The Korea Economic Research Institute also cited the fact that the rise in consumer prices due to the recent surge in international raw material prices leads to an increase in expected inflation as a factor in raising the household loan interest rate.
Using data from the first quarter of 2008 to the second quarter of 2021, the Korea Economic Research Institute analyzed the impact of the base rate hike and expected inflation on household loan rates.
As a result of the analysis, if the base rate and expected inflation rate rise by 1 percentage point, the household loan interest rate rises by 1.13 percentage points and 0.35 percentage points, respectively, and the household loan delinquency rate increases by 0.2 percentage points and 0.06 percentage points, respectively.
Based on this, it is estimated that the household loan interest rate will rise by 1.03 percentage points if the recent base rate hike and expected inflation rate are reflected.
It was analyzed that if the household loan interest rate rises by 1.03 percentage points, the household interest burden will increase by 17.5 trillion won per year.
As of 2020, the increase in the interest burden per household of 11.74 million households with financial debt is 1,491,000 won per year.
"Considering the recent steep rise in household debt and inflation, a base rate hike is inevitable," said the Korea Economic Daily. "He pointed out.