COFIX Hits Record High... From Tomorrow, Mortgage Rates Soar to High 7% Range

COFIX at 4.34% Based on New November Transactions
Up 0.36 Percentage Points from Previous Month
Variable Interest Rates on Mortgage Loans Reflecting COFIX to Rise Starting Tomorrow

[Asia Economy Reporter Sim Nayoung] Banks' variable interest rates on mortgage loans will rise again starting tomorrow, soaring to the high 7% range. This is because the COFIX (Cost of Funds Index) for new transactions in November increased by 0.36 percentage points compared to October. The COFIX for new transactions surpassed the 4% mark for the first time since its announcement in 2010, setting a new record high.

On the 15th, the Korea Federation of Banks announced that the COFIX for new transactions in November rose to 4.34%, up 0.36 percentage points from the previous month.

Although the increase was smaller than the previous month’s rise of 0.58 percentage points, the upward trend continued, marking the 10th consecutive month of increase.

Commercial banks will reflect the COFIX rate hike announced on this day in the variable interest rates for new mortgage loans starting from the 16th. A representative from a commercial bank said, "If the 0.36 percentage point rate increase is applied, the upper limit of the variable mortgage loan interest rate will rise to the high 7% range."

COFIX is the weighted average interest rate of funds raised by eight domestic banks. It reflects changes in interest rates of deposit products such as actual deposits, savings, and bank bonds handled by banks. When COFIX falls, it means banks can secure funds by paying less interest, and when COFIX rises, the opposite is true.

The COFIX based on outstanding balances also rose by 0.34 percentage points, from 2.85% to 3.19%. Both the COFIX for new transactions and the COFIX based on outstanding balances reflect interest rates of deposit products including time 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 COFIX based on outstanding balances, introduced in June 2019 (2.65%), also increased by 0.29 percentage points in one month. This new COFIX based on outstanding balances also recorded its highest level in 3 years and 5 months since the statistics were first published.

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