COFIX reverses its downward trend after a month with the market interest rate falling
COFIX drops by 0.04 percentage points based on new handling amount
Banks to reflect lower interest rates on housing loans starting tomorrow
Fixed deposit interest rates under pressure due to management of household loans at commercial banks
Effectiveness of artificial interest rate adjustments questioned due to declining interest rates
<Table> Recent COFIX index trend. Data provided by the Bank Association
,
, ‘Last month, as market interest rates fell, COFIX (Cost of Funds Index), the benchmark for bank mortgage loan variable interest rates, dropped. COFIX, which had been on a downward trend from December last year to April, rebounded in May but turned downward again after only one month.’,
, ‘While commercial banks have been adjusting fixed deposit interest rates, lease deposit loan interest rates, etc., in response to financial authorities’ management pressure on total household loans, concerns have been raised about the effectiveness of artificially adjusting interest rates through housing loan interest rate adjustments in response to these declining market interest rates.’,
, ‘According to the Bank Association on the 15th, COFIX based on the new handling amount in June was calculated at 3.52%, 0.04 percentage points lower than May (3.56%). The balance-based COFIX also decreased by 0.01 percentage point from 3.74% to 3.73%.’,
, ‘COFIX is the weighted average interest rate of funds procured by 8 domestic banks, reflecting interest rate fluctuations in deposit products such as actual handling savings deposits, time deposits, mutual funds, mortgage-backed bonds, redeemable deposit certificates, sale of conditional receivables, commercial promissory notes, and financial bonds (excluding subordinated bonds and convertible bonds).’,
, ‘When COFIX falls, it means that banks can obtain money by giving lower interest rates, and when COFIX rises, the opposite is true.’,
, ‘Specifically, new handling amount COFIX and balance-based COFIX are calculated based on interest rates of deposit products such as time deposits, regular savings deposits, mutual funds, mortgage funds, redeemable deposit certificates, sale of conditional receivables, commercial promissory notes, and financial bonds (excluding subordinated bonds and convertible bonds).’,
, “The ‘new balance-based COFIX,’ introduced in June 2019, also decreased by 0.03 percentage points from 3.20% to 3.17%. This index also takes into account other deposits and borrowings and settlement funds in addition to COFIX.”,
, ‘Starting from the 16th, commercial banks will reflect the COFIX interest rates announced on this day in variable interest rates for new mortgage loans. At KB Kookmin Bank, the new handling amount COFIX-based variable interest rate (6 months) for housing loans will decrease from 3.80-5.20% to 3.76-5.16%. The interest rate for the same standard for lease deposit loans (guaranteed by Korea Housing Finance Corporation) will also decrease from 3.88-5.28% to 3.84-5.24%.’,
, ‘At Woori Bank, the new handling amount COFIX-based variable interest rate (6 months) for housing loans will decrease from 4.73-5.93% to 4.69-5.89%.’,
, ‘Market interest rate declines are affecting fixed deposit interest rates at commercial banks. KB Kookmin Bank, which raised its fixed deposit interest rate by 0.13 percentage points on the 3rd, had a mixed fixed deposit interest rate of 3.13-4.53% on the 5th, but on this day, the rate was set at 3.06-4.46%. Hana Bank also increased its fixed deposit interest rate by 0.2 percentage points on the 1st, setting it at 3.340-3.740%, but on this day, the 5-year fixed (mixed) deposit interest rate was 3.247-3.647%, with the upper and lower ends decreasing by 0.07 percentage points each in two weeks.’,
, ‘Repeated instances of the financial bond 5-year term reaching a yearly low on the 12th are diminishing the effects of interest rate hikes. As Shinhan Bank applied a 0.05 percentage point increase in fixed deposit interest rates on this day, the cycle (fixed) deposit interest rate was set at 2.86-4.87%.’,
, ‘While commercial banks continue to adjust their interest rates, particularly by adding interest rates under a formula that “surcharge interest rates = profitability,” there have been strong demands from the political sector to disclose and announce △surcharge interest rate calculation methods and △surcharge interest rates. In fact, an amendment to the Banking Act has been proposed by the Democratic Party of Korea to require detailed disclosure of surcharge interest rates by excluding legal costs and disclosing by specific items.’,
, ‘#VariableInterestRates #DecreaseInVariableInterestRates #DecreaseInFixedInterestRates #DecreaseInMortgageRates #DecreaseInMarketInterestRates #SurchargeInterestRates #BankAssociation\n’]