All Drop Simultaneously... Forecast for Decrease in Mortgage Loan Interest Rates

[Asia Economy Reporter Kim Min-young] The COFIX (Cost of Funds Index), which serves as the benchmark for variable-rate mortgage loan interest rates in the banking sector, has collectively declined.

On the 17th, the Bankers Association announced that the COFIX based on new transactions in January stood at 1.54%, down 0.06 percentage points from the previous month, marking a decline for two consecutive months.

The new balance-based COFIX fell by 0.02 percentage points to 1.47%, continuing its downward trend for six months. The existing balance-based COFIX also dropped by 0.03 percentage points to 1.75%, extending its decline for ten consecutive months.

COFIX refers to the weighted average interest rate of funds raised by eight major commercial banks, including Shinhan, KB Kookmin, KEB Hana, and Woori Bank. When the interest rates on deposit products such as actual deposits, savings, and bank bonds handled by banks increase or decrease, COFIX rises or falls accordingly.

The balance-based COFIX includes fixed deposits, installment savings, mutual installment savings, housing installment savings, negotiable certificates of deposit, repurchase agreement sales, commercial paper issuance, and financial bonds (excluding subordinated bonds and convertible bonds).

The new balance-based COFIX adds other deposits, borrowings, and settlement funds to the products covered by the existing balance-based COFIX.

While the new and old balance-based COFIX generally reflect market interest rate changes gradually, the new transaction-based COFIX is calculated based on funds newly raised during the month, allowing it to reflect market interest rate changes more quickly.

For customers who have already taken out variable-rate mortgage loans, if the additional interest rate and preferential interest rate remain unchanged, the loan interest rate moves in accordance with the fluctuation range of the COFIX that was used as the benchmark at the time of the initial loan.