View source for Cost of funds index

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A '''cost of funds index''' or '''COFI''' is a regional average of interest expenses incurred by financial institutions, which in turn is used as a base for calculating [[variable rate]] loans. The interest rate on an [[adjustable rate mortgage]], for example, is often linked to a regional COFI specified in the particular loan documents. COFIs, in turn, are usually calculated by a self-regulatory agency like [[Federal Home Loan Banks]]. In California, for example, many home [[mortgage loan]]s are indexed to the Federal Home Loan Bank of San Francisco. Interest rates on COFI loans and mortgages tend to fluctuate more slowly than variable-rate loans linked to other indexes. An index used to determine interest rate changes for some adjustable-rate mortgages. The 11th District Cost of Funds Index was first introduced in December 1982. It is a National Monthly Median Cost of Funds defined as interest (dividends) paid or accrued on deposits for Western American Financial Institutions. It is calculated on the last day of the month. 


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[[Category:Personal finance]]

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