400 Million Won Variable-Rate Loans: Monthly Payments Jump from 1.4 Million to 2.3 Million Won

As benchmark rate hikes significantly increase the burden of mortgage interest payments, Mr. Kim (38), who took out a variable-rate loan of 400 million won, has seen his monthly repayment soar from 1.4 million won to 2.3 million won. The interest rate on Mr. Kim's mortgage, which was in the 2% range when he purchased his apartment in 2021, has now risen to the mid-5% range, pushing his monthly principal and interest repayment closer to 2.3 million won. Mr. Kim said, "It feels like the loan interest is directly consuming my salary."

With the Bank of Korea signaling further rate hikes, increased interest burdens are expected in the future.

In Korea's financial structure, which has a high proportion of variable-rate loans, the shock of high interest rates is directly impacting household economies. Borrowers who took out large loans during the past low-interest period are reaching their breaking point.