The U.S. Federal Reserve's first interest-rate increase in three years and two months is adding to borrowing costs in South Korea, where rising U.S. Treasury yields have lifted domestic bond yields and pushed bank mortgage rates above 7%. The Fed raised its target range by 0.25 percentage point to 3.75%-4.00% at its Federal Open Market Committee meeting on the 15th and 16th, with all 12 FOMC members voting in favor. Its dot plot showed 16 of 18 officials expecting at least one further increase this year. South Korea's five-year bank debenture yield reached 4.655% on the 15th, while the upper end of five-year hybrid mortgage rates at the five largest commercial banks rose to 7.29%, up from 6.23% at the end of last year. Borrowers renewing loans taken out at lower rates face significant payment increases: a 300 million won loan renewed at an average 5.9% rate would cost 500,000 won more each month. Floating-rate loans accounted for 68.3% of new mortgage lending in July, while overdue mortgage loans more than doubled from the end of 2022 to the end of June. Regulators plan measures in the second half of the year to encourage fixed-rate products with terms of at least 10 years, but borrowers are unlikely to gain much relief while rates continue rising.