The bank doesn't set all of your interest — how 0.25%p changed a ₩500M, 30-year loan by ₩75,829 a month

0.25%p. Two decimal places. It looks like nothing. But for someone who borrowed ₩500M over 30 years, it is ₩27,298,586 more in total interest. The price of a car. People say the bank raised rates, but the bank does not set all of it. And a 0.25%p rise in the base rate does not mean your loan rate rises by the same amount. They are different numbers.

First the facts. On August 27, 2026 the Bank of Korea's Monetary Policy Board raised the base rate from 2.75% to 3.00%. The increase is 0.25%p. This is where people slip: 3.00% is not the size of the increase but the level after it. And although the decision was made that day, it applies to actual funding transactions usually from the next business day. Four steps: the base rate is not your loan rate; floating or fixed; what 0.25%p means in won; and why the same step weighs differently on different people.

The base rate is what the Bank of Korea uses in transactions with financial institutions. It is not the rate on your loan. Your loan rate has two parts. One is the reference rate, a figure built from what banks pay to raise funds. For mortgages it is usually COFIX. The other is the spread, the bank's margin, which depends on your credit and collateral. One word needs separating: stress DSR also uses the term 'spread', but that is an assumption added only when computing your borrowing limit and never charged as interest. The spread here is part of the interest you actually pay. The base rate seeps into the front part (the reference rate) with a lag, and the back part is set by the bank. So you cannot say your rate rises by exactly 0.25%p. It may rise more, less, or already be priced in. That is why today's calculation is not 'the base rate rose, so my interest rises by X' but 'if my rate rose 0.25%p, what would it be'. The first is an assertion. The second is arithmetic.

Hearing the same news, a fixed-rate borrower sees nothing happen: the rate stays put for the contract term. Even a floating rate does not change tomorrow; it resets on the cycle written in the contract, often every 6 months, sometimes every 12. So the date of your next reset matters as much as the size of the step. Hybrid loans are fixed for the first few years and then switch to floating, with the switch date in the contract. The name of the reference rate matters too: COFIX comes in a new-lending version, which follows the market quickly, and an outstanding-balance version, which moves slowly. What to check now is not the news but three things in your loan contract: rate type, next reset date, and which reference rate.

Now the numbers. Say you borrowed ₩500M over 30 years, repaid in equal installments. At 4.74%, the interest paid over 30 years is ₩437,880,551. You borrowed ₩500M and pay over ₩400M in interest. See that size first, then add 0.25%p. Side by side, 4.74% versus 4.99%: the monthly payment rises by ₩75,829. Small for one month, but it is 30 years. Total interest rises by ₩27,298,586. That is roughly ₩70,000 a month (₩75,829) stacked over 30 years. Rates are quoted in percent but repaid in won, and the won are multiplied by the term. Two decimal places look small only because the term was left out.

The same 0.25%p weighs differently on different people, and three things decide it. First, remaining principal: ₩300M over 30 years adds ₩45,498 a month and ₩16,379,152 in total interest, a bit over half the ₩500M figure, nearly proportional to the amount borrowed. Second, remaining term: ₩200M over 20 years adds ₩27,452 a month and ₩6,588,397 in interest; a shorter term means fewer multiplications. Third, repayment method: the faster the principal comes down, the less a rate change hurts, because interest accrues on the remaining principal. So the borrower who took the loan most recently is shaken the most, because the principal is nearly intact and the term is long, while someone near the end feels little.

News that the base rate rose does not tell you an amount straight away. The order is this. First, your rate type. Fixed means this news does not concern you. If it is floating, look at the next reset date, because nothing changes before it. Then the remaining principal and remaining term. Those two set the weight. Finally, compute with your rate up 0.25%p. Not the worst case, but a reference point. Most people stop here not because the numbers are frightening, but because they do not know where to look.

Two things to do now: check the rate type and next reset date in your loan contract, and enter your remaining principal and term with the rate raised 0.25%p. Today's calculation simplifies the repayment method and term. Early-repayment fees, grace periods, and preferential-rate conditions differ by borrower, and the actual amount is set by the bank's repayment schedule. See in advance how many digits a decimal point in the news becomes in your account, and it will not surprise you.