As market interest rates continue their downward trend, bank deposit rates fell to the 2% range last month. The interest rate spread between savings deposits and loans has widened for six consecutive months.

According to the 'February Financial Institution Weighted Average Interest Rates' released by the Bank of Korea on the 28th, the interest rate on savings deposits (based on new business) at deposit banks last month was 2.97% per annum, down 0.1 percentage points from the previous month. This marks the fifth consecutive month of decline since October of last year (3.37%).

Interest rates on pure savings deposits such as time deposits (2.97%) and market-based financial instruments such as financial bonds and CDs (2.97%) fell by 0.11 percentage points and 0.07 percentage points, respectively.

The loan interest rate was 4.46% per annum, down 0.07 percentage points from the previous month. Both corporate loans (-0.07 percentage points) and household loans (-0.13 percentage points) have been declining for three consecutive months. In household loans, interest rates fell for all categories, including mortgage loans (-0.04 percentage points), Jeonse (lump-sum deposit for rent) loans (-0.07 percentage points), and general unsecured loans (-0.08 percentage points).

Kim Min-soo, head of the Financial Statistics Team at the Bank of Korea, explained, "As benchmark interest rates such as bank bond yields and COFIX (Cost of Funds Index) fell, household loan interest rates decreased by 0.13 percentage points, mainly driven by Jeonse loans and general unsecured loans."

The interest rate spread between loans and deposits widened to 1.49 percentage points, an increase of 0.03 percentage points from the previous month. This marks the sixth consecutive month of expansion since September of last year, indicating that the rate of decline in deposit interest rates is greater than that of loan interest rates. Team Leader Kim commented, "Banks lowered loan spread margins after mid-January, and we need to monitor how this will be reflected in the loan-deposit interest rate spread with a time lag." The outstanding balance-based loan-deposit interest rate spread, which is not based on new transactions, narrowed by 0.04 percentage points to 2.24 percentage points.

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