11th District Cost of Funds Index (COFI)
The 11th District Cost of Funds Index (COFI) is a monthly weighted average of the interest rates paid on checking and savings accounts offered by financial institutions operating in Arizona, California, and Nevada. With an ARM mortgage, the interest rate on a mortgage moves up and down along with some standard interest rate chosen by the lender, and COFI is one of the most popular indices in the western states. The interest rate on a mortgage will not match the COFI, rather the ARM rate is typically 2% to 3% higher than COFI, depending on the borrower's credit history, the size and terms of the loan, the ability of the borrower to negotiate with the bank and many other factors. Published on the last day of each month, the COFI represents the cost of funds for western savings institutions that are members of Federal Home Loan Bank of San Francisco, a self-regulatory agency, and satisfy the Bank's criteria for inclusion in the index. The 11th District Cost of Funds Index (COFI) is a monthly weighted average of the interest rates paid on checking and savings accounts offered by financial institutions operating in Arizona, California, and Nevada.
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What Is the 11th District Cost of Funds Index?
The 11th District Cost of Funds Index (COFI) is a monthly weighted average of the interest rates paid on checking and savings accounts offered by financial institutions operating in Arizona, California, and Nevada. It is one of many indices used by mortgage lenders to adjust the interest rate on adjustable rate mortgages (ARM) and was launched in 1981. With an ARM mortgage, the interest rate on a mortgage moves up and down along with some standard interest rate chosen by the lender, and COFI is one of the most popular indices in the western states.
Published on the last day of each month, the COFI represents the cost of funds for western savings institutions that are members of Federal Home Loan Bank of San Francisco, a self-regulatory agency, and satisfy the Bank's criteria for inclusion in the index.
Understanding the 11th District COFI
The 11th District Cost of Funds Index (COFI) is computed using several different factors, with interest paid on savings accounts comprising the largest weighting in the average. As a result, the index tends to have low volatility and follow market interest rate changes somewhat slowly; it is generally regarded as a two-month lagging indicator of market interest rates. The interest rate on a mortgage will not match the COFI, rather the ARM rate is typically 2% to 3% higher than COFI, depending on the borrower's credit history, the size and terms of the loan, the ability of the borrower to negotiate with the bank and many other factors.
Because it is computed using data from three western states, the COFI is primarily used in the western U.S., while the 1-year Treasury index is the measure of choice in the eastern region. On April 30, the Federal Home Loan Bank of San Francisco announced the COFI for March 2018 of 0.814%, slightly lower than February.
Related terms:
Adjustable-Rate Mortgage (ARM)
An adjustable-rate mortgage is a type of mortgage in which the interest rate paid on the outstanding balance varies according to a specific benchmark. read more
Certificate of Deposit Index (CODI)
The certificate of deposit index (CODI) was the 12-month average of the most recent dealer bid rates (yields) on nationally traded three-month certificates of deposit. read more
Conforming Loan
A conforming loan is a home mortgage with underlying terms and conditions that meet the funding criteria of Fannie Mae and Freddie Mac. read more
Cost of Funds
Cost of funds refers to the interest rate paid by financial institutions for the funds that they deploy in their business. read more
Federal Reserve Bank of San Francisco
The Federal Reserve Bank of San Francisco oversees banks in Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah and Washington. read more
Federal Home Loan Bank (FHLB) System
The Federal Home Loan Bank (FHLB) System is a consortium of regional banks created to keep cash flowing to the nation's lending institutions. read more
Mortgage
A mortgage is a loan typically used to buy a home or other piece of real estate for which that property then serves as collateral. read more
Mortgage Index
A chosen measure for setting rates, a mortgage index can affect how lenders determine interest on adjustable-rate mortgage. read more
Case-Shiller U.S. National Home Price NSA Index
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index tracks the changes in the overall value of the U.S. residential market over time. read more