Seoul: The benchmark rate for banks' mortgage loans increased for a second consecutive month in May amid expectations that the central bank may raise its key rate down the road, data showed Monday. COFIX, or the Cost of Funds Index, a benchmark lending rate for mortgage loans, came to 2.90 percent last month, up 0.01 percentage point from the previous month, according to the data from the Korea Federation of Banks.
According to Yonhap News Agency, COFIX is calculated based on the funding costs of eight domestic banks in South Korea, including Nonghyup Bank, Shinhan Bank, Woori Bank, and Citibank Korea. This incremental rise in the COFIX rate highlights ongoing adjustments in the financial landscape as banks prepare for potential changes in the monetary policy.
At its latest rate-setting meeting last month, the Bank of Korea (BOK) kept its benchmark interest rate unchanged at 2.5 percent, marking the eighth consecutive on-hold decision. However, the BOK indicated it would determine the timing of a future rate hike based on inflation trends as semiconductor-driven exports continue to support economic growth.
The decision to maintain the current interest rate underscores the BOK's cautious approach amid economic uncertainties, while the slight uptick in COFIX suggests that banks are responding to anticipated shifts in the central bank's monetary policy.