Mortgage Loan Interest Rates to Drop Starting Tomorrow... COFIX Rates Fall Across the Board
[Asia Economy Reporter Haeyoung Kwon] The interest burden on variable-rate mortgage loan users is expected to decrease.
The Korea Federation of Banks announced on the 16th that the COFIX (Cost of Funds Index) based on new loan amounts in February fell by 0.11 percentage points from the previous month to 1.43%. The COFIX based on outstanding loan balances dropped by 0.03 percentage points to 1.72% during the same period, and the new outstanding balance-based COFIX also decreased by 0.03 percentage points to 1.44% compared to the previous month.
COFIX is the weighted average interest rate of funds raised by eight domestic banks. It rises or falls reflecting increases or decreases in interest rates of deposit products such as actual deposits, savings, and bank bonds handled by banks.
The COFIX based on new loan amounts and the COFIX based on outstanding balances include fixed deposits, installment savings, mutual installment savings, housing installment savings, negotiable certificates of deposit, repurchase agreements, commercial paper sales, and financial bonds (excluding subordinated bonds and convertible bonds). The new outstanding balance-based COFIX additionally includes other deposits, other borrowings, and settlement funds.
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An official from the Korea Federation of Banks said, "The COFIX based on outstanding balances and the new outstanding balance-based COFIX generally reflect market interest rate changes gradually, but the COFIX based on new loan amounts is calculated based on funds newly raised during the month, so it reflects market interest rate changes relatively quickly. Therefore, when applying for COFIX-linked loans, it is necessary to fully understand these characteristics of COFIX and carefully select loan products."
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