Is the Upward Trend in Floating-Rate Mortgages Pausing? August COFIX Holds at 3.18%

New COFIX Rate Stays Flat in July and August
Upward Trend Seen from March to July

The Cost of Funds Index (COFIX), which serves as the reference for floating interest rates on mortgage loans at banks, has taken a breather after rising for four consecutive months.

Last year, a banner advertising a mortgage loan product was displayed at a bank in downtown Seoul. Yonhap News Agency

According to the Korea Federation of Banks on September 15, the new COFIX based on newly handled funds for August remained at an annual rate of 3.18%, the same as in July.

The new COFIX had shown a sustained upward trend for four straight months: 2.81% in March, 2.89% in April, 2.90% in May, 3.05% in June, and 3.18% in July on an annualized basis.

The balance-based COFIX for August rose 0.05 percentage points, from an annual rate of 3.00% to 3.05%. This is the highest level in one year and two months since June last year, when it reached 3.07%.

COFIX is the weighted average interest rate of funds raised by eight domestic banks—NH Nonghyup, Shinhan, Woori, Standard Chartered Bank Korea, Hana, IBK, KB Kookmin, and Citibank Korea. It reflects changes in interest rates on deposits and savings products, as well as bank bonds, depending on what the banks have actually issued and raised.

New and balance-based COFIX calculations include products such as time deposits, installment savings, mutual installment savings, housing installment savings, negotiable certificates of deposit, repurchase agreements, promissory notes, and financial debentures (excluding subordinated and convertible bonds).

The new balance-based COFIX rose from 2.65% in July to 2.71% in August. The new balance-based COFIX calculation further includes other deposit funds, other borrowings, and settlement funds.

Major commercial banks plan to apply the newly announced COFIX rates to new floating-rate mortgage loans as early as September 16.

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