The Cost of Funds Index (COFIX), which serves as the benchmark for variable interest rates on mortgage loans in the banking sector, has risen slightly.
According to the Korea Federation of Banks on October 15, the COFIX based on newly handled funds was calculated at 2.52% in September, up 0.03 percentage points from 2.49% in August. After a continuous decline since October of last year, this marks the first increase in 12 months.
However, the balance-based COFIX fell by 0.05 percentage points, from 2.94% to 2.89%.
COFIX is the weighted average interest rate of funds raised by eight domestic banks, reflecting changes in the rates of deposit products such as savings deposits, time deposits, and bank bonds actually handled by banks. A decrease in COFIX means that banks can secure funds at lower interest costs, while an increase means the opposite.
The newly handled funds COFIX and the balance-based COFIX are calculated based on the interest rates of products such as time deposits, installment savings, mutual installment savings, housing installment savings, negotiable certificates of deposit, repurchase agreements, cover notes, and financial bonds (excluding subordinated and convertible bonds).
The "new balance-based COFIX," which was introduced in June 2019, also fell by 0.05 percentage points, from 2.54% to 2.49%. The new balance-based COFIX also includes the interest rates of other deposits, borrowings, and settlement funds.
Major commercial banks plan to apply the newly announced COFIX rates to variable-rate mortgage loans as early as October 16.
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