The Bank of Korea (BOK) said in its September Financial Stability assessment Tuesday that recent interest rate increases should curb housing price expectations and borrowing, helping reverse a rise in financial vulnerabilities driven by asset prices and household credit. The BOK estimated that a 0.25 percentage-point rate increase raises annual interest costs by about $2.4 billion (3.3 trillion won) for households and $2.7 billion (3.7 trillion won) for companies, while lending rates tend to respond most strongly after about five months and bank delinquency rates after about 15 months.

Separate Financial Supervisory Service (FSS) datashowed that domestic banks’ won-loan