Variable-Rate Mortgage Rates to Rise as June COFIX Enters 3% Range

COFIX Based on New Loan Issuance Rises to 3.05%
First Time in 17 Months Since January Last Year (3.08%)

The COFIX (Cost of Funds Index), which serves as the benchmark for variable-rate mortgage loans at banks, has risen for the third consecutive month, entering the 3% range.

A loan information sign is posted at a commercial bank branch in Euljiro, Jung-gu, Seoul. Photo by Yongjun Cho jun21@

According to the Korea Federation of Banks on July 15, the COFIX based on new loan issuance stood at 3.05% in June, up 0.15 percentage points from May's 2.90%.

This marks the first time in one year and five months since January of last year (3.08%) that the COFIX based on new loan issuance has reached the 3% range.

During the same period, the COFIX based on outstanding balances also rose from 2.89% to 2.94%, an increase of 0.05 percentage points.

COFIX is the weighted average interest rate of funds raised by eight domestic banks, including NH Nonghyup, Shinhan, Woori, SC First, Hana, IBK, KB Kookmin, and Citibank Korea. When interest rates change for deposit products such as savings accounts, time deposits, or bank bonds actually handled by banks, these are reflected in the COFIX, resulting in either an increase or decrease. If the COFIX declines, banks can secure funds by paying less interest. Conversely, when it rises, the opposite effect occurs.

The new outstanding balance-based COFIX also rose from 2.50% to 2.54%. The new outstanding COFIX additionally includes other deposits, borrowings, and settlement funds. Starting as early as July 16, commercial banks are expected to apply the newly announced COFIX rates to variable-rate mortgage loans.

This content was produced with the assistance of AI translation services.