Mortgage rates from South Korean banks hit their highest level in about nine years in February, in line with central bank interest rate hikes, data showed on Thursday.

The bank mortgage rate averaged 3.88 percent a year in February, up 0.03 percentage points from the previous month, data from the Bank of Korea (BOK) showed.

This is the highest rate since March 2013, when the home loan rate hit 3.97%.

Mortgage rates rose as the BOK raised its key interest rate three times since August last year to the pre-pandemic level of 1.25%.

The rate hikes were aimed at controlling inflation and normalizing its longstanding loose monetary policy, which was put in place to cushion the fallout from the pandemic.

The central bank has hinted at further rate hikes in the coming months.

Banks’ unsecured lending rate also rose 0.05 percentage points to 5.33% in February, the highest since August 2014, the data showed.

Rising borrowing costs have raised fears that they will increase the burden on households who have taken out loans to cope with the pandemic and bought homes amid soaring house prices. (Yonhap)