South Korean commercial banks have seen newly issued mortgages with annual rates above 5% surge as much as 28-fold this year, as higher global government-bond yields and rising bank bond issuance costs push lending rates higher. Earlier data from the country's five largest commercial banks showed 2.3362 trillion won ($1.63 billion) of August mortgage lending, or 26.3% of total new lending, carried rates of at least 5%—a 14-fold increase from December. Loans above 5.5% rose 40-fold to 761.6 billion won, while the share of mortgages priced at 5% or more across 16 banks doubled to 32.5%. Banks are also facing concentrated refinancing needs and large corporate deposit maturities, while deposit rates have risen above 4% for some corporate and regional-bank products. The Financial Services Commission ordered advance reviews of fourth-quarter bank debenture and specialized credit finance company bond issuance. The report highlights tension between the Bank of Korea's efforts to contain inflation and the government's expansionary fiscal policy, with total spending scheduled to rise 12.8% next year to 820.9 trillion won and national debt projected to reach 1,519.8 trillion won. Citi economist Kim Jin-wook said the BOK will raise its base rate in November this year and February next year, taking the terminal rate to 3.5%. The BOK estimates that each 0.25 percentage point rate increase adds 3.3 trillion won to household interest payments and 3.7 trillion won to corporate payments. Vulnerable self-employed borrowers had a 12.71% delinquency rate at the end of June, compared with 1.99% for self-employed borrowers overall, while five-year hybrid mortgages originated during the pandemic-era low-rate period face refinancing pressure as fixed-rate periods expire. Analysts and industry officials have called for moderated fiscal spending and targeted support for vulnerable borrowers. The United States also faces policy tension, with the CME FedWatch tool showing a December rate-hike probability above 60% and a probability of holding rates this month above 70%. Yonsei University emeritus professor Kim Jung-sik warned that continued divergence between fiscal and monetary policy could increase liquidity, interest rates, debt-crisis risks and asset-bubble risks.