Rate hikes fail to cool Korea's housing expectations, mortgage demand
Two consecutive interest rate hikes by the Bank of Korea (BOK) have done little to cool expectations that home prices will keep rising, defying the usual pattern where higher borrowing costs weigh on the housing market, industry officials said Monday. The central bank raised its benchmark rate in July and August, each by a quarter percentage point, taking it to 3 percent. Yet its September…
The Bank of Korea's recent interest rate hikes have failed to dampen consumer optimism about Korea's housing market, despite the bank's intention to curb price expectations, according to industry officials. The central bank increased its key interest rate by a quarter of a percentage point in July and August, reaching a three percent level.
This was followed by another quarter percentage point hike in September, bringing the benchmark rate to 3 percent. However, the bank's September consumer survey revealed that the housing price outlook index remained at 125, up from 120 in June before the rate hikes commenced. A figure above 100 indicates a greater number of consumers anticipating rising home prices compared to falling ones.
Sentiment was notably stronger in Seoul, with an index of 133. This resilience is particularly notable considering mortgage rates have surged to nearly eight percent, a development that contradicts the typical pattern where higher borrowing costs usually temper housing market expectations. The latest rate hikes were partially intended to cool the housing market, with Bank of Korea Governor Shin Hyun-song stating last month that the consecutive rate increases constituted "an unusual move intended to send a strong signal."
Written by urgent.news from The Korea Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
