Why long rates moved

The 30-year US Treasury yield reached its highest level since 2007. Analysts point to heavy issuance driven by widening fiscal deficits, combined with wariness about how Middle East tensions and tariff policy will feed into prices. Long rates are rising faster than short rates.

Long yields serve as a reference for lending rates worldwide. When US yields rise, Korean government bond yields face upward pressure and banks' funding costs increase. It typically takes several weeks to a month or two to show up in bank bond rates and in COFIX.

How it reaches households

The upper end of mortgage rates at Korea's commercial banks has risen noticeably in recent weeks. Fixed-rate products track bank bond yields directly; floating-rate products pass through COFIX with a lag. Existing borrowers feel it when their rate is reset.

Jeonse deposit loans and unsecured credit lines move the same way. With the rental market already unsettled, higher borrowing costs narrow the options available to tenant households. The government says housing-stability measures are being prepared, but its tools for lowering rates themselves are limited.

For Chinese households in Korea

The same arithmetic applies to Chinese families who own or rent in Korea. Loan terms for foreign residents, however, often vary with income documentation and visa status, so the effective rate on the same product can span a wide range. Comparing terms again at renewal is practical advice.

Currency compounds it. A weaker won raises the cost of remitting home; money arriving from abroad goes further. Lending rates and exchange rates move on different drivers, so it is unwise to forecast one from the other. The judgement rests with each household.

Views on the rate outlook differ within the market itself. Some see the fiscal driver as structural; others expect a partial reversal once the Middle East situation calms. This paper endorses neither and sets the two side by side.