The COFIX (cost of funds index), which is the benchmark for variable-rate dwelling mortgage loans, has fallen for seven consecutive months.
The Korea Federation of Banks said on the 15th that the COFIX for new lending amounted to 2.7% in April, down 0.14 percentage points from the previous month. This marks a decline for seven consecutive months since last October and is the lowest level in 34 months. The COFIX based on outstanding balance also decreased by 0.08 percentage points to 3.22%.
The COFIX is the weighted average interest rate of funds raised by eight domestic banks, reflecting the interest rate fluctuations of deposit products such as savings accounts and bank bonds. If the COFIX falls, it means that banks secured money with less interest.
The 'new balance-based COFIX', introduced in June 2019, also fell from 2.80% to 2.76%, a decrease of 0.04 percentage points. The new balance COFIX includes interest rates on other deposits, borrowing funds, and payment funds. Commercial banks will reflect the fallen COFIX rate in the new variable rates for dwelling mortgage loans starting from the 16th.