Borrowers are scurrying to shift to fixed rate bank loans amid growing speculation that the country's interest rates would rise in tandem with a much-expected rate hike in the United States, with the portion of fixed-rate loans topping 40 percent, industry data showed Sunday.

According to the sources, the portion of fixed-rate loans against total loans extended by the country's four major banks stood at between 41.3 percent and 45.8 percent as of end-November, a whopping increase from the mid-30 percent range earlier this year.


For one, Shinhan Bank saw the portion stand at 41.3 percent at the end of last month, up from 36.6 percent from the end of January this year.

Fixed-rate loans extended by Woori Bank, the No. 3 lender by asset, accounted for 44.1 percent of the total lending as of end-November, up from 36.8 percent in January, the sources said.

The comparable figure for KEB-Hana Bank, the No. 1 lender, was 45.8 percent, the highest among the four banks, which include KB Bank.

Market rates are expected to rise down the road on speculation that the US Federal Reserve will raise the borrowing costs in the world's largest economy.

Fixed rates are usually higher than floating rates but are not vulnerable to market rate fluctuations.

The increased portion of fixed rate bank loans also came as the country's financial regulator is prodding banks to help borrowers convert their short-term floating-rate debts into long-term fixed rate ones, as part of efforts to tackle rising household debts.

The financial authorities have been struggling to curb the fast-growing home-backed credits to cushion any fallout from external credit risks possibly stemming from a higher U..interest rate.

Earlier, the authorities set the portion of fixed-rate bank loans at 40 percent for the year and 42.5 percent for next year. (Yonhap)