COFIX Drops 0.03%p, Variable Mortgage Rates Decrease from the 16th

by Kwon Hyeonji

Published 15 Sep.2023 15:41(KST)

Decline Continues for Two Consecutive Months Through July

Last month, as bank deposit interest rates slightly declined, the COFIX (Cost of Funds Index), which serves as the benchmark for variable interest rates on mortgage loans (Judaemdae), fell for the second consecutive month.

According to the Korea Federation of Banks on the 15th, the COFIX based on new transaction amounts in August was recorded at 3.66%, down 0.03 percentage points from the previous month (3.69%).

Previously, COFIX had been on the rise from April (3.44%) to June (3.70%) this year, but it turned downward in July for the first time in three months and declined for two consecutive months.

On the other hand, the COFIX based on outstanding balances rose by 0.03 percentage points to 3.86% from the previous month (3.83%), and the newly introduced COFIX based on outstanding balances, implemented in June 2019, also increased by 0.06 percentage points to 3.27% from the previous month (3.21%).

COFIX is the weighted average interest rate of funds raised by eight domestic banks, fluctuating according to the interest rates of deposit products such as actual deposits, savings, and bank bonds handled by banks. A decline in COFIX means banks can secure funds at a lower interest cost, while an increase indicates higher funding costs.

Specifically, COFIX based on new transaction amounts and COFIX based on outstanding balances are calculated based on interest rates of 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). When calculating the new COFIX based on outstanding balances, other deposits, borrowings, and settlement funds are additionally considered.