Soaring Variable Mortgage Rates... COFIX Rises 0.24% in November

COFIX Based on New Transactions
Rises for Three Consecutive Months

The Cost of Funds Index (COFIX), which serves as the benchmark for variable-rate mortgage loans in the banking sector, has risen for three consecutive months.

The Korea Federation of Banks announced on December 15 that the new transaction-based COFIX for the previous month recorded 2.81%, up 0.24 percentage points from the previous month.

The outstanding balance-based COFIX remained unchanged from the previous month at 2.48%. However, the balance-based COFIX, which is calculated differently, was recorded at 2.83%, down 0.01 percentage points from the previous month.

COFIX is the weighted average interest rate of funds raised by eight domestic banks. It reflects increases or decreases in the interest rates of deposit products such as savings deposits and bank bonds that banks actually handle, causing the index to rise or fall accordingly.

In particular, the new transaction-based COFIX is calculated based on funds newly raised during the relevant month, meaning it reflects changes in market interest rates more quickly. As COFIX rises, major commercial banks are also expected to adjust their mortgage loan rates.

The short-term COFIX, based on the posted rates over the past four weeks, ranged from 2.67% to 2.89%. The short-term COFIX is calculated based on short-term funds with a three-month maturity.