Mortgage Rates Hit 14-Year High of 4.88%

The interest burden on home purchases has grown to its highest level in 14 years. According to the September weighted-average interest rates of financial institutions released by the Bank of Korea on the 29th (rates averaged based on each institution's loan volume), the rate on new mortgage loans backed by homes rose 0.22 percentage points from a month earlier to an annual 4.88%. For the first time since statistics began, fixed-rate mortgage rates (where the interest rate remains unchanged over the loan term) exceeded the 5% mark, reaching 5.11%. According to the Bank of Korea, the rise reflects market rates climbing about 0.2 percentage points following the August base rate hike.

One program borrowers can take advantage of is the right to request a rate reduction. If their income rises or credit improves, borrowers can ask their bank to lower the rate, and the bank must notify them of its decision and reasons within 10 business days. Mortgage refinancing is also available. A refinancing service is being operated as outlined by the Financial Services Commission, and eligibility can be confirmed with the borrower's financial institution.

The early repayment penalty system has also changed. For new contracts signed on or after January 13, 2025, early repayment penalties are charged only within the scope of actual costs, with penalties and applicable periods varying by contract. Individual loan rates and terms can be checked directly with the borrower's bank.

This content is based on the Bank of Korea's 'September 2026 Financial Institution Weighted-Average Interest Rates' (released October 29), Article 18-4 of the Enforcement Decree of the Banking Act, and materials from the Financial Services Commission.