Starting Today, Variable Interest Rates on Mortgage Loans Increase by 0.03%p Each

Kookmin Bank 2.63%~4.13%
Woori Bank 2.62~3.63%
Nonghyup Bank 2.71%~3.62%

View of apartments in Seoul and Gyeonggi-do from Seoul Tower.
[Image source=Yonhap News]

[Asia Economy Reporter Park Sun-mi] As the COFIX (Cost of Funds Index), which serves as the benchmark for calculating variable interest rates on mortgage loans, has risen again, major commercial banks will apply higher variable mortgage loan rates starting from the 18th.

According to the banking sector on the 18th, variable mortgage loan interest rates at KB Kookmin Bank, Woori Bank, NH Nonghyup Bank, and others will be adjusted upward by 0.03 percentage points from that day. The new mortgage loan interest rates based on new loan amounts effective from the 18th are 2.63% to 4.13% at Kookmin Bank, 2.62% to 3.63% at Woori Bank, and 2.71% to 3.62% at Nonghyup Bank, each rising by 0.03 percentage points compared to the previous day. Based on outstanding loan balances, the rates remain at current levels: 2.74% to 4.24% at Kookmin Bank, 2.48% to 3.49% at Woori Bank, and 2.57% to 3.48% at Nonghyup Bank.

COFIX Fluctuation Trends

This increase is due to the COFIX for new loan amounts in July, announced by the Korea Federation of Banks the day before, rising to 0.95% from 0.92% in the previous month, an increase of 0.03 percentage points. After nearly a 0.1 percentage point rise from May to June, it has risen again. The COFIX based on new loan amounts has been on an upward trend since February this year (0.83%).

COFIX refers to the weighted average interest rate of funds raised by eight domestic banks. Commercial banks reflect the COFIX rate level in their variable mortgage loan interest rates.

Amid the financial authorities' strengthened management of household loans, banks have been steadily raising mortgage loan interest rates by adjusting additional margins and preferential rates. The variable mortgage loan interest rates at the five major banks currently range from 2.48% to 4.24% annually, up from 2.34% to 4.13% a month ago, with the lower bound increasing by 0.14 percentage points and the upper bound by 0.11 percentage points.

A representative from the Korea Federation of Banks stated, “While the COFIX based on outstanding balances and new outstanding balances generally reflects 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 changes relatively quickly. Therefore, those seeking COFIX-linked loans should carefully select loan products.”

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