South Korea's COFIX index climbs, pushing up variable mortgage rates

South Korea's COFIX (funding cost index) rose for a second consecutive month. For May, the new‑loan‑basis COFIX reached 2.90%, up 0.01 percentage point from April, while the balance‑basis COFIX rose to 2.89%, up 0.02 points. The index reflects the weighted‑average cost of funds for eight domestic banks and incorporates rates on deposits, bonds and other securities.

The increase forces banks to raise the interest rates on variable‑rate home‑loan products starting 16 July. KB Kookmin Bank’s 6‑month variable mortgage will move to 4.07‑5.47% (from 4.06‑5.46%), and Woori Bank’s similar loan will rise to 4.38‑5.58% (from 4.37‑5.57%). Lease‑hold loan rates also climbed. The hikes come as the Bank of Korea is expected to lift its policy rate in July, adding further pressure on borrowers.