The Cost of Funds Index (COFIX), which serves as the benchmark for variable interest rates on bank mortgage loans, has declined for four consecutive months.
The Korea Federation of Banks announced on the 17th that the COFIX based on new contracts in January was recorded at 3.08%, down 0.14 percentage points from the previous month (3.22%). This marks a decline for four straight months since October last year.
The COFIX based on outstanding balances fell by 0.05 percentage points to 3.42%, and the COFIX based on new outstanding balances decreased by 0.06 percentage points to 2.92%.
COFIX is the weighted average interest rate of funds raised by eight domestic banks (NH Nonghyup, Shinhan, Woori, SC Jeil, Hana, IBK Industrial Bank, KB Kookmin, and Korea Citibank). It reflects increases or decreases in the interest rates of deposit products such as savings and time deposits, and bank bonds actually handled by banks.
In particular, the COFIX based on new contracts is calculated using funds newly raised during the relevant month, which allows it to quickly reflect changes in market interest rates. As COFIX rises, the mortgage loan rates of major commercial banks are also adjusted.
The short-term COFIX, calculated based on the announced interest rates over the past four weeks, ranged from 3.01% to 3.19%. The short-term COFIX is calculated using short-term funds with a contract maturity of three months.
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