Mortgage Variable Interest Rates Drop Again... COFIX Falls by 0.04%P

The Cost of Funds Index (COFIX), an indicator of variable interest rates on mortgage loans in the banking sector, has declined again.

The Korea Federation of Banks announced on the 15th that the COFIX based on new contract amounts last month fell by 0.04 percentage points from the previous month to 3.52%. COFIX had shown an upward trend in May for the first time in six months but turned downward again after just one month.

The COFIX based on outstanding balances decreased by 0.03 percentage points to 3.17%. However, the COFIX based on total balances was recorded at 3.73%, down by 0.01 percentage points.

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, and bank bonds actually handled by banks. In particular, the COFIX based on new contract amounts is calculated using funds newly raised during the relevant month, so it tends to reflect market interest rate changes more quickly. As COFIX rises, mortgage loan interest rates at major commercial banks are also expected to be adjusted.

The short-term COFIX, based on announced interest rates over the past four weeks, ranged from 3.51% to 3.57%. The short-term COFIX is calculated based on short-term funds with a contract maturity of three months.