The cost of funds index (COFIX), the benchmark for banks' variable rates on mortgage loan, rose for the fourth straight month.
According to the Korea Federation of Banks on the 15th, the COFIX based on new business in December last year was tallied at 2.89%, up 0.08 percentage points (p) from November (annual 2.81%). The balance-based COFIX also rose 0.01 percentage points from 2.83% to 2.84%. COFIX is the weighted average interest rate on funds raised by eight domestic banks, reflecting changes in rates on deposit products actually handled by banks, such as savings and time deposits and bank bonds.
When COFIX falls, it means banks can secure funds while paying less interest, and when COFIX rises, the opposite is true. Specifically, the new-business COFIX and balance-based COFIX are calculated based on the rates of deposit products such as time deposits, time installment savings, mutual installment savings, dwellings installment savings, certificates of deposit, repurchase agreements, commercial bills, and financial debentures (excluding subordinated and convertible bonds).
The "new balance-based COFIX," introduced in June 2019, fell 0.01 percentage points from 2.48% to 2.47%. The new balance COFIX also includes rates on other deposits, borrowing fund, and settlement funds. Commercial banks plan to reflect the COFIX published that day in variable rates for new mortgage loan as early as on the 16th.