New-loan COFIX hits 3.05% in June

Outstanding-balance rate also rises

A bank teller window [Herald DB]
A bank teller window [Herald DB]

The COFIX (Cost of Funds Index), the benchmark for variable-rate home loans at South Korean banks, rose for a third consecutive month, signaling further increases in floating mortgage rates.

The Korea Federation of Banks said Wednesday the new-loan COFIX for June came in at 3.05% per annum, up 0.15 percentage points from May's 2.90%, crossing the 3% threshold for the first time in the three-month run of increases. The outstanding-balance COFIX also climbed 0.05 percentage points, from 2.89% to 2.94%.

COFIX is the weighted average interest rate on funds raised by eight domestic banks. It reflects changes in rates on deposit and savings products — including time deposits, installment savings and bank bonds — that banks use to secure funding.

A falling COFIX means banks can secure funds while paying less in interest; a rising COFIX means they must pay more.

Both the new-loan and outstanding-balance COFIX are calculated based on rates on a range of deposit products, including time deposits, installment savings, mutual installment savings, housing installment savings, certificates of deposit, repurchase agreements, cover bills and financial bonds (excluding subordinated and convertible bonds).

The "new outstanding-balance COFIX," introduced in June 2019, rose from 2.50% to 2.54%. This measure also incorporates rates on other deposits, borrowings and settlement funds.


forest@heraldcorp.com