Floating Mortgage Rates to Rise Again... COFIX Sees Largest Jump in 3 Years and 10 Months

Influenced by rising benchmark and market interest rates, COFIX (Cost of Funds Index), which serves as the benchmark for variable mortgage rates in the banking sector, has risen once again.

According to the Korea Federation of Banks on the 15th, the COFIX based on newly handled funds for September was tallied at 3.43 percent, up 0.25 percentage points (p) from August (3.18 percent per annum).

This marks the highest level in 2 years and 3 months since June 2024 (3.52 percent).

The margin of increase is the largest in 3 years and 10 months since November 2022 (0.36 percentage points).

The newly handled funds-based COFIX rose for four consecutive months from April to July this year, before halting its upward trend in August to remain flat at 3.18 percent per annum, the same as the previous month.

The balance-based COFIX rose by 0.10 percentage points from 3.05 percent to 3.15 percent per annum.

COFIX is the weighted average interest rate of funds raised by eight domestic banks, reflecting interest rate fluctuations in deposit and savings products, bank debentures, and other receiving products actually handled by banks.

An increase in COFIX means that banks must pay higher interest to secure funds.

A decrease indicates the opposite.

Specifically, the newly handled funds-based COFIX and balance-based COFIX are calculated based on the interest rates of receiving products such as time deposits, installment savings, mutual installments, housing installments, certificates of deposit (CDs), repurchase agreements (RPs), cover bills, and financial debentures (excluding subordinated bonds and convertible bonds).

The new balance-based COFIX rose from 2.71 percent to 2.79 percent per annum.

This also includes interest rates on other deposits, borrowings, and settlement funds.

Commercial banks plan to reflect the COFIX rate released today in their new variable mortgage rates starting as early as the 16th.

KB Kookmin Bank is raising its variable mortgage rate (6-month) based on newly handled funds COFIX from 4.39–5.79 percent to 4.64–6.04 percent.

The interest rate for jeonse (lump-sum deposit lease) loans based on the same standard (guaranteed by the Korea Housing Finance Corporation) will be raised from 4.23–5.63 percent to 4.48–5.88 percent.

Woori Bank is also raising its variable mortgage rate (6-month) based on newly handled funds COFIX from 4.75–5.95 percent to 5.00–6.20 percent.
※ Please note: This article was translated by AI and may contain errors.