Taking out a loan in Korea means choosing between a fixed and a variable rate, and that choice is usually made on top of a forecast — “where are rates headed?” This article makes no forecast. It answers three questions: how much your payment rises when the rate rises, how far it can actually rise, and what to decide on instead.
1. Per 100 million won of loan, one percentage point is about 60,000 won a month. On a 30-year level-payment loan, between 55,800 and 64,300 won depending on where the rate sits.
2. The largest recent rise was 2.75 points. From August 2021 to January 2023 — one year and five months.
3. Apply that to a 300-million-won loan and the payment rises 510,000 won a month, 6.16 million a year. Choosing a variable rate is a judgement that you could carry that amount.
Each of the three, worked through below.
What one point costs you a month
The money first. On 300 million won borrowed over 30 years with level payments:
| Rate | Monthly payment | Total over 30 years |
|---|---|---|
| 3.00% | 1,264,812 KRW | about 455.3m |
| 4.00% | 1,432,246 KRW | about 515.6m |
| 5.00% | 1,610,465 KRW | about 579.8m |
| 6.00% | 1,798,652 KRW | about 647.5m |
| 6.75% | 1,945,794 KRW | about 700.5m |
| Calculated by us from the level-payment formula, on the loan rate itself. A real product adds a lender margin on top. | ||
One rule of thumb falls out of this. Per 100 million won of loan, one percentage point is about 60,000 won a month. Over 30 years:
| Rate step | Monthly rise per 100m won |
|---|---|
| 3% → 4% | 55,811 KRW |
| 4% → 5% | 59,406 KRW |
| 5% → 6% | 62,729 KRW |
| 6% → 7% | about 66,000 KRW |
| A point weighs slightly more the higher the rate already is, so “60,000 per 100 million” is a rough anchor. A shorter term lowers it — over 20 years it is about 54,000. | |
With that rule you can build your own number without forecasting anything. A 200-million loan is 120,000 won a month per point; 400 million is 240,000. All that remains is to multiply by how far rates can move.
How far rates can move — 2.75 points in 17 months
That question is answered by history rather than by prediction. The recent stretch of the Bank of Korea's base rate record:
| Period | Movement | Size and duration |
|---|---|---|
| Aug 2021 – Jan 2023 | 0.75% → 3.50% (10 increases) | +2.75 points in 1 year 5 months |
| Jan 2023 – Oct 2024 | Held at 3.50% | About 1 year 9 months without a change |
| Oct 2024 – May 2025 | 3.25% → 2.50% (4 cuts) | −0.75 points in 7 months |
| 16 July 2026 | 2.50% → 2.75% | Turned back to an increase |
| Someone who chose a variable rate in August 2021 and someone who chose one in October 2024 lived through entirely different outcomes. Neither could have known at the time. | ||
Multiply the rule by that move and the money appears. 2.75 points × 60,000 per 100 million = about 170,000 won a month per 100 million. By loan size:
| Principal | Monthly at 4.00% | At 6.75% | Difference |
|---|---|---|---|
| 100 million | 477,415 KRW | 648,598 KRW | +171,000 a month |
| 200 million | 954,831 KRW | 1,297,196 KRW | +342,000 a month |
| 300 million | 1,432,246 KRW | 1,945,794 KRW | +514,000 a month · +6.16m a year |
| 500 million | 2,387,076 KRW | 3,242,990 KRW | +856,000 a month |
| This assumes a 2.75-point rise in the base rate passes straight through to the loan rate. Actual pass-through and timing differ by product. | |||
The base rate and your loan rate do not move one for one. The Bank of Korea describes the transmission this way: a base rate change reaches the economy “through channels that typically include the interest rate channel, the asset price channel, the credit channel, the exchange rate channel and the expectations channel.” So the table above is best read as close to an upper bound.
What to decide on instead
The numbers above support exactly one decision rule. Choose on whether you could carry it, not on where you think rates go.
| Step | What to do |
|---|---|
| 1 | Calculate the monthly payment on today's terms — principal, term, and the rate you were quoted |
| 2 | Add two points to the rate and calculate again. That comes out about 120,000 won higher per 100 million |
| 3 | Ask whether you could pay that every month. If yes, you can carry the risk in a variable rate |
| 4 | If no, the answer is a fixed rate. You pay more at the start and step two never arrives |
| 5 | If you plan to refinance later, put the early repayment fee into the same calculation |
| The sequence is ours, not the Bank of Korea's. But the two points used in step two are backed by a record that contains a larger move than that (2.75 points). | |
The advantage of this method is that you do not have to be right. You cannot know where rates will go, but you can answer whether you could pay if they rose.
Run your own numbers in the loan interest calculator. The cost of switching is in early repayment fees and refinancing; whether to repay or invest spare cash is in this article. The base rate also lands directly in the jeonse-to-monthly-rent converter.
Questions that come up
Which is better right now, fixed or variable?
This article does not make that call. A comparison needs the two rates you personally were quoted at the same moment, and those differ by borrower. Run the four steps above against each of them — if the variable rate plus two points is heavier than the fixed rate, that gap is what the fixed rate is worth to you.
If the base rate rises, does my loan rate rise by the same amount?
Not by the same amount. As the Bank of Korea writes, five channels — interest rate, asset price, credit, exchange rate and expectations — sit between the base rate and the real economy. What a variable-rate loan is indexed to (COFIX, bank bonds and so on) and how often it resets differ by product. The calculations here assume full pass-through, so they may run higher than reality.
What if it rises more than two points?
Extend the same rule. One point is about 60,000 won a month per 100 million, so three points is about 180,000 per 100 million — 540,000 a month on a 300-million loan. The fastest rise in the record, though, is 2.75 points in 1 year 5 months.
Why is a fixed rate more expensive at the start?
The source does not explain that. But what the record does show — direction reverses often and moves can be large — is not at odds with a structure that charges for locking a rate in advance. That reading is ours.
Is 26 years of history even relevant?
Against a loan term it is short. Choosing a 30-year mortgage covers more time than this entire record with a single decision. That said, past patterns carry no guarantee of repeating.
What we read into it
From 10 February 2000 to 16 July 2026 the base rate changed 59 times, and on 12 of those occasions the direction reversed between raising and cutting — once every 2 years 2 months on average across 26 years and 5 months. Choosing a 30-year loan on the premise that rates will fall assumes a single direction across a stretch in which direction flipped more than ten times.
| Marker | Date | Base rate |
|---|---|---|
| Highest on record | 5 October 2000 (and again on 7 August 2008) | 5.25% |
| Lowest on record | 28 May 2020 | 0.50% |
| Current | 16 July 2026 | 2.75% |
| The gap between low and high is 4.75 points, a factor of 10.5 (our calculation). Today's 2.75% sits almost exactly in the middle. | ||
The count of changes and reversals is ours from the source record; the Bank of Korea does not publish those totals.
Sources
- Bank of Korea (tier 1, public institution) — Base rate history (checked August 2026). Source for every change date and value from 10 February 2000 to 16 July 2026, including 2.75% on 16 July 2026, 2.50% on 29 May 2025, 3.50% on 13 January 2023, 0.75% on 26 August 2021, 0.50% on 28 May 2020 (lowest on record) and 5.25% on 5 October 2000 (highest on record). A footnote on the page notes that figures through February 2008 are call rate targets.
- Bank of Korea (tier 1, public institution) — Transmission of monetary policy (checked August 2026). Source for the five transmission channels — interest rate, asset price, credit, exchange rate and expectations. This page likewise says nothing about how long transmission takes.
- Our own calculation. Monthly payments come from the level-payment formula: on 300 million over 30 years, 1,432,246 won at 4.00% and 1,945,794 at 6.75%, a difference of 513,548 a month and 6,162,581 a year; 55,811 to 62,729 won per 100 million per point over 30 years, and about 53,975 over 20 years. The 59 changes, 12 reversals, the 2-year-2-month average, and the 4.75-point / 10.5-times spread are also ours, counted from the source record.
Where to check further
- The rate you will actually be quoted — the figures here exclude the lender margin. Mortgage rates by institution, split into fixed and variable, are published by the Financial Supervisory Service's financial product comparison service.
- The index a variable rate follows — COFIX and bank bond yields are published monthly by the Korea Federation of Banks consumer portal. Which index a product uses, and how often it resets, differ product by product.
- Debt service ratio rules — how the payment you calculated feeds into your borrowing limit belongs to the household lending rules published by the Financial Services Commission and the Financial Supervisory Service. This article does not cover them.
Written as of August 2026. Base rate values and change dates are carried from the Bank of Korea's own record; monthly payments, the count of changes and the count of reversals are marked as our calculations. This article is general information and does not recommend any product or rate type. Decide with your own repayment capacity and the lender's terms in front of you.
