Cofix’s’Flexible Headquarters Standard’ Falls for 2 Consecutive Months

Input 2021.03.15 15:37 | Revision 2021.03.15 15:57

The COFIX (financing cost index), which banks use as a standard for calculating variable-rate mortgage interest rates, has declined again. Bank term deposit interest rates are reflected in COPIX, but analysis shows that COPIX is also unlikely to rise as the balance of deposits has recently increased and interest rates are bottoming out.

According to the Federation of Banks on the 15th, the co-fix based on the amount of new treatment in February was 0.83%, down 0.03 percentage points (p) from the previous month (0.86%). It has been on the downtrend for the second consecutive month since it fell from 0.90% in December of last year to 0.86% in January.

The balance-based and new balance-based Cofix also fell 0.04%p and 0.03%p MoM to 1.09% and 0.87%, respectively. The balance-based co-fix has continued to decline for the 23rd month and the new balance-based co-fix for the 18th month.

COPIX is a weighted average of the interest rates of funds raised by eight domestic banks, including Nonghyup, Shinhan, Woori, SC Cheil, Hana, Enterprise, Kookmin, and Citibank Korea. Cofix based on the new balance is calculated by additionally including other deposits, other borrowings, and settlement funds.

With the recent rise in market interest rates such as financial bonds, the interest rate of fixed-mixed mortgage loans has been on the rise, but the rate of variable mortgage loans reflecting the COPIX interest rate has seldom risen. Regarding this, a banking official said, “Cofix reflects the interest rates of regular deposits and savings, but as liquidity in the market is overflowing recently, there is no need to raise the deposit and savings interest rates.” As there is no work, the COPIX interest rate is also lowering,” he said.

Balance-based co-fixes and new balance-based co-fixes generally reflect market interest rate fluctuations gradually. However, based on the amount of new treatment, Cofix is ​​calculated based on the funds newly raised in the month, and the fluctuations in market interest rates are relatively quickly reflected.

As a result, commercial banks will reflect the level of the February Cofix rate, which was disclosed on the day, in the new home mortgage loan variable rate starting on the 16th. In the case of Woori Bank, the interest rate for the main charge based on the amount of new treatment falls from 2.54 to 3.64% per annum to 2.51 to 3.61% per annum, and the co-fix based on the new balance falls from 2.58 to 3.68% per annum to 2.55 to 3.65% per annum. NH Nonghyup Bank also lowers the annual interest rate to 2.41 to 3.62% from 2.44 to 3.65% per year based on the amount of new treatment, and from 2.48 to 3.69% per year to 2.45 to 3.66% per year based on the new balance.

In the case of a consumer receiving a variable-rate mortgage loan, if the additional and preferential interest rates remain the same, the loan rate will be adjusted by the amount of change in the cofix that was used as the basis for the initial loan. The Federation of Banks said, “If you want to receive a cofix-linked loan, you need to carefully select a loan product after understanding the characteristics of such Cofix.”