Variable Mortgage Rates Rise... COFIX Up 0.08%p in April
Outstanding Balance-Based COFIX at 2.87%, New Outstanding Balance-Based COFIX at 2.49%
All Benchmarks for Variable-Rate Mortgage Loans Rise
The Cost of Funds Index (COFIX), which serves as the benchmark for variable-rate mortgage loans in the banking sector, has risen across the board. The COFIX based on new loans recorded a 0.08 percentage point increase from the previous month, reaching 2.89%.
The Korea Federation of Banks announced on May 15 that it had disclosed the COFIX for April. The COFIX based on new loans stood at 2.89% for April, up 0.08 percentage points from the previous month.
The COFIX based on outstanding balances also rose. As of the end of April, the outstanding balance-based COFIX was 2.87%, a 0.02 percentage point increase from the previous month. The COFIX based on new outstanding balances climbed by 0.04 percentage points over the same period to 2.49%.
COFIX is the weighted average interest rate of funds raised by eight domestic banks. It rises or falls in response to changes in the interest rates of deposit products—such as time deposits and savings accounts—and bank bonds actually handled by banks. The banks included in the calculation are NongHyup, Shinhan, Woori, Standard Chartered Korea, Hana, IBK, KB Kookmin, and Citibank Korea.
The COFIX based on new loans and the COFIX based on outstanding balances include regular savings deposits, time deposit accounts, installment savings accounts, mutual installment savings, housing installment savings, negotiable certificates of deposit, repurchase agreements, promissory notes, and financial bonds. The COFIX based on new outstanding balances additionally reflects other deposits, other borrowings, and settlement funds.
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The Korea Federation of Banks explained that while the COFIX based on outstanding balances and the one based on new outstanding balances tend to reflect changes in market interest rates gradually, the COFIX based on new loans is calculated using funds newly raised during the month and thus reflects market rate changes more quickly.
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