1% Mortgage Loans Available at 5 Major Banks... Borrow 200 Million KRW, First Month Interest 320,000 KRW (Comprehensive)

June KOFIX Hits Record Low
NongHyup Bank, Annual 1.96~3.57%

[Asia Economy Reporter Kim Min-young] The era of mortgage loans with interest rates in the 1% range has begun. Amid an unprecedented ultra-low interest rate trend, the variable interest rates on mortgage loans at major commercial banks have fallen to historically low levels.

According to the banking sector on the 16th, NH Nonghyup Bank adjusted its COFIX (Cost of Funds Index)-linked variable mortgage loan interest rates for new loans, effective from that day, down by 0.17 percentage points from the previous day to an annual rate of 1.96?3.57%. A Nonghyup Bank official stated, "This is the first time since the establishment of Nonghyup Bank in 2012 that mortgage loan interest rates have fallen into the 1% range."

Woori Bank also set its variable mortgage loan interest rates at 2.36?3.96% starting from the same day, lowering them by 0.17 percentage points compared to the previous day.

KB Kookmin Bank applied rates of 2.21?3.71%, down 0.18 percentage points from the previous day, also marking a record low.

These banks also reduced their COFIX-linked mortgage loan interest rates based on the new balance by 0.08?0.09 percentage points. From this day, Nonghyup Bank adjusted rates to 2.25?3.86%, Kookmin Bank to 2.52?4.02%, and Woori Bank to 2.65?4.05%.

This follows the impact of the June COFIX announced by the Korea Federation of Banks the previous day, which dropped to an all-time low.

The June COFIX based on new loan amounts was 0.89%, down 0.17 percentage points from May's 1.06%. This is the first time COFIX has fallen below 1% since its initial disclosure in February 2010.

The COFIX based on new balances was 1.18% last month, down 0.08 percentage points from May.

COFIX is the weighted average interest rate of deposit products used by eight banks to raise funds, including fixed deposits, installment savings, mutual installment savings, and housing installment savings. After the Bank of Korea lowered the base interest rate to 0.50% in May, banks' funding costs decreased, leading to a drop in COFIX. This, in turn, increases the potential for lowering loan interest rates.

Shinhan Bank and Hana Bank, which calculate COFIX-linked mortgage loan interest rates daily, did not change their rates within the day. The mortgage loan interest rates for Shinhan and Hana on that day were 2.29?3.54% and 2.491?3.791%, respectively.

If a borrower takes out a 200 million KRW loan at a 1.96% interest rate with a 20-year term using the equal principal and interest repayment method, the first month's interest payment would be approximately 326,000 KRW. However, a banking sector official explained, "Although mortgage loans with interest rates in the low 1% range have appeared, most customers will actually receive rates in the 2?3% range because they must meet certain preferential conditions or belong to specific occupational groups such as farmers."

This content was produced with the assistance of AI translation services.