South Korean banks' mortgage rates have surged over the past 17 months despite a freeze in the country's benchmark interest rate, industry data showed Monday.

Annual mortgage rates charged by South Korea's major lenders have risen by 0.4 percentage point to more than 0.8 percent since May last year, according to the data from the Korea Federation of Banks.

As of October, the state-run Industrial Bank of Korea had the highest interest rate of 3.55 percent on 10-year mortgages, up slightly over 0.8 percentage point over the cited period. 

Market watchers attributed the rise in mortgage rates to high expectations that the Bank of Korea may jack up its key interest rate this week.

The central bank is tipped to raise the base rate by a quarter percentage point to 1.5 percent in its policy meeting slated for Thursday on the economy's strong growth. The BOK has frozen the rate at 1.25 percent since July last year.

Buoyed by brisk exports, the nation's gross domestic product rose 1.4 percent on-quarter in the July-September period. From a year ago, it grew 3.6 percent.

Rising mortgage rates are feared to be a big financial burden on South Korean households, which could further dampen their spending. South Korea's household debt hovers above 1,400 trillion won, a perennial bugbear for policymakers. (Yonhap)