New COFIX Reverses to Rise After 10 Months... Up 0.08%P Compared to Previous Month

Balance-Based COFIX Continues Downward Trend

[Asia Economy Reporter Minyoung Kim] The COFIX (Cost of Funds Index), which serves as the benchmark for variable-rate mortgage loans in the banking sector, has reversed its trend and risen.

According to the Bankers Association on the 15th, the COFIX based on new loan amounts last month was 0.88%, up 0.08 percentage points from the previous month. This marks the first increase in 10 months. This is attributed to a slight rise in the interest rates of deposit products such as savings and time deposits handled by banks.

The COFIX based on outstanding balances continued its downward trend. The new outstanding balance-based COFIX was 1.04%, down 0.03 percentage points from the previous month. This marks the 15th consecutive month of decline since its first announcement on July 15 last year. The existing outstanding balance-based COFIX (1.30%) also fell by 0.05 percentage points, marking 18 consecutive months of decline.

COFIX refers to the weighted average interest rate of funds raised by eight major commercial banks including Shinhan, KB Kookmin, Hana, and Woori Bank. When the interest rates of deposit products such as savings, time deposits, and bank bonds actually handled by banks increase or decrease, COFIX rises or falls accordingly.

The outstanding balance-based COFIX includes time deposits, installment savings, mutual installment savings, housing installment savings, negotiable certificates of deposit, repurchase agreement sales, commercial paper sales, and financial bonds (excluding subordinated bonds and convertible bonds).

The new outstanding balance-based COFIX adds other deposits, borrowings, and settlement funds to the products covered by the existing outstanding balance-based COFIX.

While the new and old outstanding balance-based COFIX generally reflect market interest rate changes gradually, the COFIX based on new loan amounts is calculated based on funds newly raised during the month, thus reflecting market interest rate changes more quickly.

A representative from the Bankers Association stated, “Those seeking COFIX-linked loans need to fully understand these characteristics of COFIX and carefully choose loan products.”

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