The COFIX (Cost of Funds Index), a benchmark for variable interest rates on home loans in South Korea, has risen for three consecutive months, increasing the financial burden on borrowers.
According to the Korea Federation of Banks, the COFIX for new loans in June was recorded at 3.05%, up 0.15 percentage points from the previous month’s rate of 2.90%.
This marks the first time since January 2022, when it was 3.08%, that the new COFIX has surpassed the 3% threshold. The index has been on the rise since April.
The balance-based COFIX increased from 2.89% to 2.94%, while the new balance-based COFIX rose from 2.50% to 2.54%.
COFIX represents the weighted average interest rate of funds raised by eight major banks in South Korea. A decrease in COFIX indicates that banks can secure funds at lower interest rates, while an increase suggests the opposite.
With the COFIX rising, borrowers, particularly those who have taken out loans under the “영끌족” (young people who borrow heavily), will face higher interest payments. Major banks are expected to reflect the newly announced COFIX rates in their variable interest rates for new home loans starting from the 16th.
At KB Kookmin Bank, the variable interest rate for new loans based on the COFIX will increase from a range of 4.06% to 5.46% to a range of 4.07% to 5.47%. Similarly, the interest rate for jeonse loans (long-term lease loans backed by the Korea Housing Finance Corporation) will rise from 3.7% to 5.1% to 3.71% to 5.11%.
Woori Bank will also see an increase in its variable interest rates for new loans based on the COFIX, from 4.37% to 5.57% to 4.38% to 5.58%.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.