Variable Interest Rates on Mortgage Loans Rise...KOPIS Up 0.02%P After 6 Months

The Cost of Funds Index (COFIX), a benchmark for variable interest rates on mortgage loans in the banking sector, rose for the first time in six months.

The Korea Federation of Banks announced on the 17th that the COFIX based on new contracts last month increased by 0.02 percentage points from the previous month to 3.56%. COFIX had declined for five consecutive months since December last year before turning upward.

The COFIX based on outstanding balances rose by 0.03 percentage points to 3.20%. However, the COFIX based on total balances decreased by 0.02 percentage points to 3.74%.

COFIX is the weighted average interest rate of funds raised by eight domestic banks, reflecting increases or decreases in interest rates on deposit products such as savings and time deposits, as well as bank bonds actually handled by banks. In particular, the COFIX based on new contracts is calculated using funds newly raised during the relevant month, so it tends to reflect market interest rate changes more quickly. With the rise in COFIX, mortgage loan rates at major commercial banks are also expected to be adjusted.

The short-term COFIX, based on the announced interest rates over the past four weeks, ranged from 3.52% to 3.63%. The short-term COFIX is derived from short-term funds with a contract maturity of three months.