The state-run Korea Development Bank has also slashed its lending rate on fresh household loans by 0.4 percentage points to 2.99 percent over the cited period, while SC Bank, the local unit of Britain-based banking giant Standard Chartered PLC, has lowered its rate to 2.89 percent from 3.08 percent in January.

The move apparently followed a delay in a U.S. rate hike that could prompt a mass outflow of foreign capital here.

Local banks' lending rates began trending higher late last year when the U.S. Federal Reserve raised its key interest rate by 0.25 percentage points, marking the first U.S. rate hike in nearly a decade.

The U.S. Fed has since stood pat on its policy rate, while the latest Federal Open Market Committee meeting held last week again left the key rate unchanged, also sending a signal that its rate hikes will likely be limited to twice instead of four times as previously predicted.

Korea's own policy rate has been kept frozen at a record low 1.5 percent since June 2015.

"Market interest rates appear to have been lowered due to a growing demand for the Bank of Korea to further slash its key rate amid a continued slump in the local economy and a delay in the U.S. rate hike," a KFB official said, while speaking on the condition of anonymity.

However, the cut in borrowing rates for households comes amid efforts by the government and the central bank to limit the growth of household debts.

As of the end of last year, the country's household debts reached an all-time high of 1,207 trillion won ($1.03 trillion).

The government earlier forecast the growth of household debts to slow down this year, partly on a rise in borrowing rates.

"In order to boost their capabilities to repay loans, we will strive to help increase household income by creating more jobs while devising supportive measures for the underprivileged," it has said. (Yonhap)