DEFINITION of '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. 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.

BREAKING DOWN '11th District Cost of Funds Index - 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 2-3% 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
  1. Floating Interest Rate

    A floating interest rate is an interest rate that is allowed ...
  2. ARM Index

    Lenders use a benchmark interest rate called an ARM index to ...
  3. Home Mortgage

    A home mortgage is a loan given by a bank, mortgage company or ...
  4. Mortgage Interest

    Mortgage interest is the interest paid by homeowners on the financing ...
  5. Mortgage

    A mortgage is a debt instrument that the borrower is obliged ...
  6. Interest Cost

    Interest cost refers to the cumulative amount of interest a borrower ...
Related Articles
  1. IPF - Mortgage

    Mortgages: Fixed Rate vs. Adjustable Rate

    Both fixed rate and adjustable rate mortgages have advantages and disadvantages, depending on your financial needs and prospects.
  2. IPF - Mortgage

    Fixed or Variable Rate Mortgage: Which Is Better Right Now?

    Find out the benefits of fixed- and variable-rate mortgages, and learn which option is best for you.
  3. IPF - Mortgage

    Finding the Best Mortgage Rates

    As home-buying technology has progressed, the process of finding the best mortgages rates can all be done online. Here's how.
  4. IPF - Mortgage

    How Interest Rates Affect the Housing Market

    Understand how rate changes can affect home prices and learn how you can keep up.
  5. Personal Finance

    Reduce Interest With An All-In-One Mortgage

    "Offset" mortgages combine a checking account, home-equity loan and mortgage into one account.
  6. IPF - Mortgage

    Shopping for Mortgage Rates

    Are you planning on buying a home? Here is a step-by-step guide to find and lock in the best rate for a mortgage.
  7. IPF - Mortgage

    Mortgage Rates

    View current daily average mortgage rates for fixed and adjustable rate loans. Learn more about mortgage rates and how we can help you reach your home ownership goal.
  8. Personal Finance

    How Do Mortgage Lenders Get Paid and Make Money?

    When homebuyers educate themselves on how mortgage lenders get paid and make money, they are more likely to save thousands of dollars on their mortgages.
  9. Personal Finance

    5 Secrets You Didn't Know About Mortgages

    Being savvy about the ins and outs of mortgages can mean big savings in the long term.
  10. Investing

    Financial Institutions: Stretched Too Thin?

    Find out how to evaluate a firm's loan portfolio to determine its financial health.
RELATED FAQS
  1. What’s the Difference Between a Mortgage Lender and a Mortgage Servicer?

    Buying a home is an exciting and confusing process. Once the loan is secured, it's important to know who gets the payment: ... Read Answer >>
  2. Fixed and variable rate loans: Which is better?

    Interest on variable interest rate loans move with market rates; interest on fixed rate loans will remain the same for that ... Read Answer >>
Hot Definitions
  1. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  2. Current Assets

    Current assets is a balance sheet account that represents the value of all assets that can reasonably expected to be converted ...
  3. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
  4. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  5. Cost of Debt

    Cost of debt is the effective rate that a company pays on its current debt as part of its capital structure.
  6. Depreciation

    Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account ...
Trading Center