The Bank of Korea is keeping the base rate (annual 2.50%) on hold, but variable rates on mortgage loans are set to rise again. The Cost of Funds Index (COFIX), the benchmark for variable-rate mortgage loans in the banking sector, rose for the third straight month after increasing last month.
According to the Korea Federation of Banks on the 15th, the COFIX based on new handling amount was 2.81% in Nov., up 0.24 percentage points (p) from Oct. (annual 2.57%). However, the COFIX based on outstanding balance fell 0.01 percentage point to 2.83% from 2.84%.
COFIX is the weighted average interest rate of funds raised by eight domestic banks, reflecting changes in the rates of deposits and savings and other deposit products that banks actually handle, such as bank bonds. When COFIX falls, it means banks can secure money by paying less interest, and when COFIX rises, the opposite is true.
Specifically, the COFIX based on new handling amount and the COFIX based on outstanding balance are calculated based on the rates of deposit products such as time deposits, installment savings, mutual installment savings, dwellings installment savings, negotiable certificates of deposit, repurchase agreements, cover bill sales, and financial bonds (excluding subordinated bonds and convertible bonds).