The Cost of Funds Index (COFIX), the benchmark for variable rates on mortgage loan in the banking sector, fell for the first time in five months.
According to the Korea Federation of Banks on the 19th, last month's COFIX based on new handling amount was tallied at 2.77%, down 0.12 percentage points (p) from December last year (an annual 2.89%). In contrast, the balance-based COFIX rose 0.01%p from 2.84% to 2.85%.
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 demand and time deposits and bank bonds. When COFIX falls, it means banks can secure money while paying less interest, and when COFIX rises, the opposite is true.
Specifically, the new handling amount COFIX and the balance-based COFIX are calculated based on rates for deposit products such as time deposits, installment savings, mutual installment savings, dwellings installment savings, certificates of deposit, repurchase agreements, cover bill sales, and financial debentures (excluding subordinated bonds and convertible bonds).
In the case of the "new balance-based COFIX," introduced in June 2019, it rose 0.01%p from 2.47% to 2.48%. The new balance COFIX also includes rates on other deposits, borrowing fund, and settlement funds. Commercial banks plan to reflect the COFIX rates released this day in variable rates for new mortgage loan as early as on the 20th.