South Korean banks are set to raise their lending rates after the key interest rate in the United States reached the two percent range.

The Korea Federation of Banks on Saturday announced that COFIX, a benchmark lending rate for mortgage loans, was one-point-82 percent for new loans as of Saturday, up point-03 percentage points from the previous month and the highest level in 18 months.

The COFIX rate for outstanding loans also rose point-03 percentage points to one-point-83 percent.

In line with the increases, domestic banks also marked up their mortgage loans.

Major lender Kookmin Bank said it will increase its rates on outstanding COFIX-linked home-backed loans by point-03 percentage points to up to four-point-72 percent, with the rates on new loans rising up to four-point-56 percent.

The U.S. Federal Reserve raised its key rate by a quarter of a percentage point to a range of between one-point-75 percent and two percent last week.