Variable home loan rates to rise further as new COFIX hits 19-month high

The benchmark rate for variable-rate home loans in South Korea, known as COFIX (Cost of Funds Index), has hit its highest level in 19 months, signaling increased borrowing costs for homeowners. The new COFIX rate, calculated based on funds newly acquired by banks, rose by 0.13 percentage points to 3.18% in July.

This marks the fourth consecutive monthly increase since the rate began trending upward in April. The last time the new COFIX rate reached such a high was in December 2024, when it stood at 3.22%. The increase is attributed to rising funding costs for banks, which are directly reflected in the interest rates for variable-rate mortgages.

Other COFIX benchmarks also saw increases. The outstanding balance-based COFIX rose to 3.00%, the first time it has exceeded 3% since July of last year. The new outstanding balance-based COFIX, which includes short-term and liquid funds, increased to 2.65%. Banks adjust variable mortgage rates based on these COFIX figures, meaning borrowers will likely face higher monthly payments.