Seoul, Aug 27 Banks' loan rates declined in July amid the central bank's monetary easing cycle, though rates on home-backed loans went up for the second consecutive month amid tighter lending regulations, data showed on Wednesday.
The average lending rate on new bank loans stood at 4.06 percent last month, down 0.03 percentage point from a month earlier, according to the data from the Bank of Korea (BOK).
The rate had risen in June for the first time in five months but reversed course last month, reports Yonhap news agency.
In detail, the average interest rate on corporate loans declined by 0.02 percentage point to 4.04 per cent in July.
The rate for new household loans edged down by 0.01 percentage point to 4.2 percent, marking the eighth consecutive monthly decrease.
But the interest rate for home-backed mortgage loans gained 0.03 percentage point to 3.96 per cent in July, marking the second consecutive monthly increase.
The on-month gain came as the government introduced tighter lending rules, including a 600 million-won ($429,830) cap on mortgage loans in Seoul and its surrounding area, in an effort to curb rising household debt and surging home prices.
The rate that banks pay for deposits fell 0.04 percentage point to 2.51 percent, the 10th consecutive monthly decline.
The spread between banks' lending and deposit rates went up 0.01 percentage point to 1.55 percentage points in July, the data showed.
The BOK began the monetary easing cycle in October and has since lowered its key interest rate by a cumulative 100 basis points in an effort to support economic growth.
At its latest rate-setting meeting in July, the central bank held the benchmark rate steady at 2.5 percent amid growing concerns over household debt and uncertainties related to the United States' tariff policies. The next policy meeting is scheduled for Thursday.
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