The monthly cost-of-funds index (COFI) reflects the weighted-average interest rate paid by 11th Federal Home Loan Bank District savings institutions for savings and checking accounts. The 11th district covers Arizona, California and Nevada. The index is published on the last day of the month and reflects the cost of funds for the prior month.
The Federal Home Loan Bank 11th District Monthly Weighted Average Cost of Funds Index is used to set the cost of variable-rate loans, such as an adjustable-rate mortgage. Lenders use such an index, which varies, to adjust interest rates as economic conditions change. They then add a certain number of percentage points called a margin, which doesn’t vary, to the index to establish the interest rate you must pay. When this index goes up, interest rates on any loans tied to it also go up. COFI usually lags market interest rates in both up and down markets. That means loans tied to this index rise and fall more slowly than rates in general.
For this data source, RIMES hosts the Cost of Funds Indices. Some of the data items available include:
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