11th District Cost of Funds Index (COFI)

What Is the 11th District Cost of Funds Index?

The 11th District Cost of Funds Index (COFI) is a month to month 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 numerous indices utilized by mortgage lenders to change the interest rate on adjustable rate mortgages (ARM) and was sent off in 1981. With an ARM mortgage, the interest rate on a mortgage goes all over alongside some standard interest rate picked by the lender, and COFI is one of the most well known indices in the western states.

Distributed on the last day of every month, the COFI addresses the cost of funds for western savings institutions that are individuals from Federal Home Loan Bank of San Francisco, a self-regulatory agency, and fulfill the Bank's criteria for inclusion in the index.

Figuring out the 11th District COFI

The 11th District Cost of Funds Index (COFI) is processed utilizing several unique factors, with interest paid on savings accounts containing the biggest weighting in the average. Thus, the index will in general have low volatility and follow market interest rate changes to some degree slowly; it is generally viewed as a two-month lagging indicator of market interest rates. The interest rate on a mortgage won't match the COFI, rather the ARM rate is normally 2% to 3% higher than COFI, contingent upon the borrower's credit history, the size and terms of the loan, the ability of the borrower to haggle with the bank and numerous different factors.

Since it is figured utilizing data from three western states, the COFI is principally utilized in the western U.S., while the 1-year Treasury index is the measure of decision in the eastern region. On April 30, the Federal Home Loan Bank of San Francisco announced the COFI for March 2018 of 0.814%, marginally lower than February.