COFIX Declines Again... New Loan Amount at 0.87%

[Asia Economy Reporter Kim Min-young] The COFIX (Cost of Funds Index), which serves as the benchmark for variable-rate mortgage loans in the banking sector, has returned to a downward trend.

According to the Bankers Association on the 16th, the COFIX based on new loan amounts last month was 0.87%, up 0.01 percentage points from the previous month. It rose by 0.08% last month for the first time in 10 months, then immediately declined.

The COFIX based on outstanding loan balances also continued its downward trend. The new outstanding balance-based COFIX was 1.00%, down 0.04 percentage points from the previous month. This marks the 16th consecutive month of decline since its first announcement on July 15 last year. The existing outstanding balance-based COFIX (1.25%) also fell by 0.05 percentage points, marking 19 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. It rises or falls reflecting increases or decreases in interest rates on deposit products such as actual deposits, savings, and bank bonds handled by banks.

The outstanding balance-based COFIX includes 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 adds other deposits, borrowings, and settlement funds to the products covered by the existing outstanding balance 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, so it reflects market interest rate changes more quickly.

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

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