2026 Interest Rate Hike: Impact on Your Loans
📌 Key Points
- ⚠️ 1%p rate hike → 3M extra interest on 300M loan
- ⚠️ Variable rate borrowers affected immediately
- ✅ Consider fixed rate or early repayment
- ✅ Refinancing can reduce rates
1. How Rate Hikes Affect Loans
When the central bank raises the base rate, commercial loan rates follow. Variable rate loans see immediate impact on monthly payments.
2. Calculate Interest Increase
Impact by Loan Type
| Loan Type | Amount | 1%p Increase | Extra/Year |
|---|---|---|---|
| Mortgage | 300M | 4.5% → 5.5% | +3000K |
| Jeonse Loan | 200M | 4.0% → 5.0% | +2000K |
| Personal | 5,000K | 7.0% → 8.0% | +50K |
💡 Calculate your loan payment
Mortgage Calculator →3. Response Strategies
Strategy 1: Switch to Fixed Rate
Switching from variable to fixed rate protects against future hikes. However, fixed rates may be slightly higher than current variable rates.
Fixed Rate Pros
- • Predictable payments
- • No rate risk
- • Easier planning
Fixed Rate Cons
- • Higher initial rate
- • No benefit if rates fall
- • Conversion fees may apply
Strategy 2: Early Repayment
If you have extra funds, partial early repayment reduces principal and interest burden. Check prepayment fees first.
💡 Calculate prepayment benefit
Prepayment Calculator →Strategy 3: Refinancing
Switching to another bank with lower rates can reduce interest. Consider handling fees, prepayment penalties, and stamp duty when refinancing.
4. Financial Strategy During Rate Hikes
💰 Use Higher Deposit Rates
Deposit rates also rise. Maximize interest on emergency funds with parking accounts or CMA.
📉 Prioritize Debt Repayment
If investment returns are lower than loan rates, debt repayment is better.
5. Real Scenario Calculation
📊 Simulation: 300M Mortgage
Current
• Loan: 300M KRW
• Rate: 4.5%
• Term: 30 years
• Monthly: 1.52M KRW
After 1%p Hike
• Loan: 300M KRW
• Rate: 5.5%
• Term: 30 years
• Monthly: 1.70M (+180K)
Annual Extra: 2.16M KRW