"Mortgage Holders Face More Pressure as Variable Loan Rates Rise Again... July COFIX Up 0.13%p"

Korea Federation of Banks Announces July COFIX on August 18
COFIX Based on New Funds Rises for Fourth Consecutive Month

The Cost of Funds Index (COFIX), which serves as the benchmark for variable interest rates on bank mortgage loans, has risen for four consecutive months.

A notice related to loans at a KB Kookmin Bank branch in Yeouido, Seoul, on the 9th of last month. Photo by Yonhap News Agency

According to the Korea Federation of Banks on August 18, the COFIX based on new deposits last month stood at an annual rate of 3.18%, up 0.13 percentage points from June's 3.05%.

This marks a four-month increase since April, reaching its highest level in one year and seven months since December 2024, when it recorded 3.22%.

The COFIX based on outstanding balance also climbed by 0.06 percentage points, rising from an annual rate of 2.94% in June to 3.00% last month.

COFIX, or the Cost of Funds Index, is a weighted average interest rate on funds raised by eight domestic banks: NH NongHyup, Shinhan, Woori, Standard Chartered Korea, Hana, IBK, KB Kookmin, and Citibank Korea. It is adjusted to reflect changes in the rates of deposit and savings products, as well as bank debentures actually handled by banks.

The COFIX based on new deposits and outstanding balance includes regular time deposits, installment savings, mutual installment savings, housing installment savings, negotiable certificates of deposit (NCDs), repurchase agreements (RPs), promissory notes, and bank debentures (excluding subordinated bonds and convertible bonds).

The new outstanding balance-based COFIX increased from an annual rate of 2.54% in June to 2.65% last month. This index also covers other deposits, borrowings, and settlement funds.

Commercial banks are expected to apply the COFIX rates disclosed today to new variable rate mortgage loans as early as August 19.

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