00:00500 million won mortgages now carry monthly interest of roughly 2.92 million won at a 7%
00:06variable rate, and the gap between fixed and variable rates has narrowed sharply.
00:10It's Monday, October 26th. Let's look at what's happening in Korea's property market.
00:15Variable mortgage rates at the five major banks now range from 4.42% to 6.795%.
00:21That's up as much as 0.07 percentage points since late September.
00:25For a borrower with a 500 million won loan, the gap between a 5% rate and a 7%
00:31rate is about
00:32830,000 won a month in extra interest. The COFIX index, the benchmark for variable loans,
00:38rose to 3.43% in September, a two-year and three-month high. Here's what the numbers show.
00:44The spread between fixed and variable rates has collapsed from 0.55 percentage points to 0.20
00:50percentage points in just a few weeks. Variable rates are rising because COFIX climbed 0.25
00:55points, while five-year bank bond yields fell. That divergence is squeezing borrowers who are
01:01weighing which product to choose. Household loans are growing again too. Total lending at the five
01:06major banks reached 783.4 trillion won, adding 2.6 trillion won in the past few weeks. Mortgage
01:13lending alone rose nearly 1 trillion won, about eight times the September increase. Demand is returning,
01:19even as borrowing costs climb. So what does this mean for buyers weighing a purchase this year?
01:23The rate gap that once made variable loans attractive has largely disappeared. A borrower
01:29locked into a fixed rate now pays only slightly more each month than a variable borrower,
01:33but gets protection if the Bank of Korea raises rates again. Earlier, we said the rate gap was
01:38narrowing. Here's what that actually means for you. The cheapest option today may not be the cheapest
01:44over the life of the loan. What to watch? Bank of Korea rate moves and COFIX readings in the coming
01:49months. That's today's AI Prism, real estate. This episode was produced with AI assistants based on
01:55Seoul Economic Daily reporting. AI Prism is a Juan Ifra award-winning series. We'll be back tomorrow.
