There is a temporary abnormal situation in

There is a temporary abnormal situation in which those who engage in the theory of real estate speculation and the theory of uselessness of won value are trying to avoid it. The Korea-US benchmark interest rate has been reversed since 2023.

Under normal circumstances, Korea’s base rate should be higher than the dollar’s base rate. If the United States gives more interest rates than Korea, it will of course sell the won and invest in the United States. Although Korea’s base rate varies from time to time, it is fundamentally higher than the US base rate.

The U.S. was forced to contain soaring prices after overcoming the economic crisis with an unprecedented release of the dollar. So the U.S. Federal Reserve is creating an unprecedented surge in interest rates starting in 2023. But most countries have been unable to keep up with the rise in interest rates. No other country on Earth has a better domestic market than the U.S. Furthermore, economic players were in debt to weather the recession.

In the case of Japan, the interest rate is still almost zero due to a mountain of government bond debt. Korea is a household debt. Most of them are mortgage loans and lease on a deposit basis loans. This debt is supporting the real estate market.

Currently, Korea’s benchmark interest rate of 2.5% is in line with major currencies such as euro 2.15% and yuan 3%. However, due to the long-term reversal of interest rates, the exchange rate and inflation are already showing signs of abnormalities. There is room for an increase due to the good unemployment rate, which is the main indicator of interest rate adjustment, but the problem is household debt. Even if the Bank of Korea wants to raise interest rates to defend inflation, it seems that the Bank of Korea is insisting on a pre-emptive decision on household debt and real estate PF issues.

This is why the government’s tightening of real estate mortgage loans and reducing lease on a deposit basis will inevitably continue. While carefully checking the vitals to see how long the domestic economy will be able to withstand the interest rate reversal.