Commercial Banks' Variable Rate Mortgage Loan Interest Rates Increased by 0.03%p...

COFIX Based on New Transactions in November Rises 0.03%p to 0.90% Compared to Previous Month

[Image source=Yonhap News]

[Asia Economy Reporter Park Sun-mi] Variable interest rates on mortgage loans at commercial banks have all risen simultaneously. This is because the newly issued amount-based index of the Cost of Funds Index (COFIX), which serves as the basis for calculating mortgage loan rates in the banking sector, has increased.

According to the banking sector on the 16th, commercial banks raised the variable mortgage loan rates based on the newly issued amount by 0.03 percentage points from the previous day. Kookmin Bank adjusted its rates from 2.76~3.96% per annum to 2.79~3.99%, Woori Bank from 2.73~3.83% to 2.76~3.86%, and NH Nonghyup Bank from 2.66~3.67% to 2.69~3.70%, respectively.

Shinhan Bank, which calculates its newly issued amount-based variable mortgage loan rates based on 5-year financial bonds, also raised its rates by 0.06 percentage points from a month ago to 2.45~3.70% per annum. Hana Bank, which uses 6-month financial bonds as a benchmark, also increased its rates by 0.073 percentage points from a month ago to 2.686~3.986% per annum. From this day forward, borrowers will face a greater interest burden.

According to the Korea Federation of Banks, the COFIX based on newly issued amounts in November was 0.90%, up 0.03 percentage points from the previous month. The COFIX, which had rebounded in September after 10 months, slightly declined in October but rose again in November. This is the highest level since it recorded 1.06% in May.

COFIX is the weighted average interest rate of funds raised by eight domestic banks, reflecting increases or decreases when banks raise or lower interest rates on deposit products such as actual deposits, savings, and bank bonds. The newly issued amount-based COFIX is calculated based on funds newly raised during the month, so it tends to reflect market interest rate changes more quickly.

However, the balance-based and new balance-based COFIX, which generally reflect market interest rate changes gradually, recorded 1.21% and 0.96% respectively in November, down 0.04 percentage points each from the previous month. Accordingly, the new balance-based variable mortgage loan rates were lowered by 0.04 percentage points from the previous day to 2.77~3.97% at Kookmin Bank, 2.82~3.92% at Woori Bank, and 2.75~3.76% at Nonghyup Bank.