Variable Interest Rates on Mortgage Loans to Decrease... COFIX Down 0.04%p from Previous Month

Half the Level Compared to the Same Period Last Year

▲COFIX (Cost of Funds Index) as of January 2021 announced by the Korea Federation of Banks on the 15th.

[Asia Economy Reporter Wondara] The COFIX (Cost of Funds Index), which serves as the benchmark for variable interest rates on mortgage loans in the banking sector, continued its downward trend. The COFIX based on new loan amounts, outstanding balances, and new outstanding balances all declined compared to the previous month in January.

According to the "January 2021 COFIX" announced by the Korea Federation of Banks on the 15th, the COFIX based on new loan amounts was 0.86%, down 0.04 percentage points from the previous month (December last year, 0.9%). The COFIX based on outstanding balances was 1.13%, down 0.04 percentage points from the previous month (1.17%), and the COFIX based on new outstanding balances also fell by 0.03 percentage points to 0.9% from 0.93% the previous month.

These figures are about half of those from the same period last year. In January last year, the COFIX based on new loan amounts was 1.54%, the COFIX based on outstanding balances was 1.75%, and the COFIX based on new outstanding balances was 1.47%.

From the 16th, commercial banks will reflect the January COFIX rate level disclosed on this day in the new variable interest rates for mortgage loans. COFIX is the weighted average interest rate of funds raised by eight domestic banks including NongHyup, Shinhan, Woori, Hana, Industrial Bank of Korea, Kookmin, SC First Bank, and Citibank Korea. It reflects changes when banks raise or lower interest rates on deposit products such as actual deposits, savings, and bank bonds.

The Korea Federation of Banks stated, "While the COFIX based on outstanding balances and new outstanding balances gradually reflects market interest rate changes, the COFIX based on new loan amounts tends to reflect market interest rate changes more quickly. Therefore, those seeking COFIX-linked loans should fully understand these characteristics of COFIX and carefully select loan products."